After several years of recession, the lodging industry is in the midst of a recovery — and that recovery is expected to continue through 2011 and into 2012, according to the latest U.S. lodging industry forecast by PricewaterhouseCoopers (PwC), released yesterday.
Based on an updated macroeconomic forecast from Macroeconomic Advisers LLC, which predicts stronger economic growth in the second half of 2011 than the first half, PwC expects occupancy and average daily rate (ADR) to contribute equally to a 7.6 percent increase in revenue per available room (RevPAR) in 2011. In 2012, meanwhile, it forecasts a 7 percent increase in RevPAR, due mostly to gains in ADR.
One reason for this growth, according to PwC, is an expansion of hotel demand coupled with a contraction of hotel supply: Lodging supply is expected to increase only 0.7 percent in 2011 — significantly below the long-term average of 2.1 percent — driving occupancy levels up 59.8 percent this year, which in turn will lead to a 3.7 percent increase in ADR in 2011 and an additional 5.5 percent increase in 2012.
"The recovery of average room rates is expected to gain traction in the second half of this year," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC US. "With supply growth subdued and solid demand recovery, hotel operators are increasingly focused on driving room rates, by refining distribution channel strategies and rebuilding their base of advance group bookings to drive yield on short-term bookings."
To download a full copy of PwC's U.S. lodging forecast, visit www.pwc.com.