Lower Occupancy, Higher Rates at U.S. Hotels This Holiday Season, PricewaterhouseCoopers Lodging Research Network Reports

NEW YORK, Nov. 17 / The occupancy rate at U.S. hotels is forecast to be 63.8 percent in the fourth quarter of 1998 (the busy holiday travel season), down from 64.6 percent a year ago, while average daily room rates rise faster than inflation to $80.34 this holiday season from \$76.79 last year. That's according to the Lodging Research Network ( www.lodgingresearch.com), the Internet-based resource for lodging industry data and information from PricewaterhouseCoopers, the world's largest professional services organization. Historical figures are from Smith Travel Research.

"Throughout this holiday season, U.S. hotel occupancy rates will continue the gentle decline they began in 1997," observes Bjorn Hanson, Ph.D., New York-based global partner in the PricewaterhouseCoopers lodging, gaming and leisure group. "As a result, it will be easier to find a hotel room in some U.S. cities," he says, "but not in America's gateway destinations such as New York, Boston and Chicago, where occupancy rates remain robust."

U.S. average daily room rates will continue to rise faster than the rate of inflation, according to www.lodgingresearch.com. Steady -- but moderating -- growth in demand for hotel rooms will permit hoteliers to raise room rates 4.8 percent in the fourth quarter of 1998 over the year-earlier period, the Lodging Research Network reports. That should fuel another year of record profits for the hotel industry, Dr. Hanson reports.

New York City: At Capacity

Travelers to Manhattan this holiday season will find a scarcity of rooms -- and room rates that are lofty, PricewaterhouseCoopers says.

Manhattan hotels will enjoy a remarkable 84 percent occupancy in the fourth quarter of this year, according to a forecast by the Lodging Research Network. That's up from 82 percent occupancy in the year-ago period, according to a proprietary survey of 70 Manhattan hotels by PricewaterhouseCoopers.

Average daily room rates in Manhattan will be approximately \$245 in the fourth quarter, according to a forecast by the Lodging Research Network. That's up 15 percent from \$213 in the year-ago period, according to the PricewaterhouseCoopers survey. Rates at some of New York's deluxe hotels will range from \$350 to more than \$700 for a standard room between Thanksgiving and New Year's, the firm says.

"It will be undeniably difficult for travelers to find a hotel room in Manhattan this holiday season," says Sean F. Hennessey, New York practice director of the PricewaterhouseCoopers hospitality and leisure practice. " Eighty-four percent occupancy is essentially Manhattan's capacity." One hundred percent occupancy is never possible because of rooms renovations and other factors, Mr. Hennessey explains. Over time, several new Manhattan hotels in the works will help the room availability picture, Mr. Hennessey says.

"Meanwhile, robust revenue streams are bringing historic profitability to most Manhattan hotels -- and a record number of renovations and property upgrades," Mr. Hennessey notes. That's a big plus for travelers to Manhattan, he adds.

Hawaii: Rooms and Reasonable Rates

Travelers to Hawaii will find more rooms this holiday season than last, according to PricewaterhouseCoopers. Hawaii's hotel occupancy will be a still-strong 72.0 percent in the fourth quarter, down from 74.2 percent a year ago, the firm says. Meanwhile, average daily room rates will inch higher to \$127.00, up from \$123.85 at 1997's year-end, PricewaterhouseCoopers says.

"Hawaii continues to be a desirable destination, with occupancy levels that allow for some choice in rooms -- and room rates that maintain reasonable levels," observes Honolulu-based PricewaterhouseCoopers director Joseph Toy. "Room rates have risen slower in Hawaii than on the mainland," he adds. In Hawaii, room rates rose only slightly faster than the U.S. inflation rate in the fourth quarter of this year versus last, while on the mainland, rates have risen at three times the rate of inflation during the same period.

The PricewaterhouseCoopers Lodging Research Network ( www.lodgingresearch.com) makes available via the Internet PricewaterhouseCoopers' renowned econometric forecasts for the lodging industry; breaking lodging industry news; Sales Comps, an exclusive database of lodging industry real estate sales and Development Outlook, a comprehensive database of hotel construction data from the Lodging Econometrics research division of National Hotel Realty; financial data of publicly traded lodging companies (including SEC filings), as well as an extensive research library that includes U.S. econometric and demographic statistics. For more information about the Lodging Research Network, call toll-free 888-576-6656.

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