U.S Hotel Rates Forecast to Rise 5.6 Percent in 2006

New York -- Average daily rates at U.S. hotels will rise by 5.6 percent this year over last year, according to the latest forecast from PricewaterhouseCoopers.

The average $5.08 jump in room rates expected this year represents the largest increase in 24 years, the professional services firm said yesterday in releasing its forecast.

"Although the national average rate of increase of 5.6 percent is high, the increases in many cities, including New York, San Francisco, Honolulu, and Boston will be even higher--7 percent to more than 10 percent," said Bjorn Hanson, a partner in the firm's hospitality and leisure practice.

"Guests will see even larger increases during peak periods," Hanson added.

The percent increase is greater than the 5.3 percent increase that lodging industry tracker Smith Travel Research reported for 2005 as compared with 2004.

PricewaterhouseCoopers said the rate increase is a result of rapidly increasing occupancy, 1.7 occupancy points in 2005, and an additional 1 point increase in its forecast for 2006, to 64.1 percent.

With the rate increases, hotel owners are recovering record levels of investment in renovations and enhancements, including flat screen televisions, high-speed Internet connections, and improved beds.