U.S. Hotel Occupancy Will Begin Dipping In 1997 (Coopers & Lybrand L.L.P. Market Report)

U.S. Hotel Occupancy Will Begin Dipping in 1997, Coopers & Lybrand L.L.P. Lodging

Consultants Forecast But Revenue Per Available Room and Profit Growth ..

NEW YORK, Oct. 31 / Overall occupancy rates at U.S. hotels are likely to decrease slightly in 1997 and continue to decline in 1998 and into 1999, according to a just-released econometric analysis from Coopers & Lybrand L.L.P.'s national hospitality consulting practice. The decline would be the first time since 1991 that U.S. hotel occupancy rates have dropped.

With new hotel construction increasing the number of rooms available, Coopers & Lybrand forecasts that overall hotel occupancy will be 65.9 percent for 1997, down slightly from the 66.0 percent forecast for all of 1996. For 1998 overall, U.S. hotel occupancy will be 65.7 percent, dropping to 65.6 for 1999 overall, Coopers & Lybrand forecasts. Occupancy rates for the lodging industry will continue to be well above the 20-year average of 64.6 percent throughout the forecast period, Coopers & Lybrand notes.

"Despite the slight decrease in occupancy that will be felt later in 1997, U.S. hotels will still have dramatic increases in revenue per available room (RevPAR) and profit growth for the next several years," says Dr. Bjorn Hanson, New York-based chairman of the Coopers & Lybrand national

hospitality consulting practice.

"Demand growth will also continue at moderate levels over the next two years," Hanson says. "However, the often-cited lack of hotel construction is history. Room starts in 1996 will total 102,000, the highest since 1989."

Coopers & Lybrand uses a proprietary econometric model to forecast U.S. lodging industry trends. Underlying economic assumptions are from The WEFA Group, the Philadelphia-based macroeconomic forecaster.

The accuracy of Coopers & Lybrand's econometric forecasts for the lodging industry is well established. In 1991, when the lodging industry was still declining in occupancy and losses were mounting, Coopers & Lybrand forecast that 1993 would be the year of profitability and the first year in six that average daily rate would increase by more than inflation. Both predictions proved accurate.

In the first quarter 1996, in the midst of robust lodging industry occupancy levels, Coopers & Lybrand was the first lodging consulting firm to forecast a coming downturn in hotel occupancy. The firm's occupancy "early warning" was issued in March 1996.

Coopers & Lybrand's exclusive forecasts for U.S. hotel occupancy, average daily rate (ADR), revenue per available room (RevPAR) and other key indices are published in Coopers & Lybrand Hospitality Directions. Available by annual subscription, Coopers & Lybrand Hospitality Directions analyzes industry empirical research and financial data, reveals developing industry trends and provides timely strategic information valuable to hospitality industry leaders, owners, management, investors and attorneys. Each issue includes a 12-quarter forecast for the hospitality industry.

One of the world's leading professional services firms, Coopers & Lybrand L.L.P. provides services for enterprises in a wide range of industries. The firm offers its clients the expertise of more than 16,000 professionals and staff in offices located in 100 U.S. cities and, through the member firms of Coopers & Lybrand International, more than 70,000 people in 140 countries worldwide.