Due To Record Expansion of U.S. Economy, Lodging Results for 2000 Will Be Stronger Than Anticipated

This RevPAR growth is the direct result of the greatest demand growth the industry has witnessed in over ten years. At 4.3 percent, demand growth is the highest it has been since 1989, and it is more than enough to offset supply growth of 3.2 percent and to allow for average daily rate increases of 4.5 percent. PricewaterhouseCoopers expects occupancy to reach 63.9 percent, or 0.7 percentage points above 1999 occupancy. This is the first time in five years that occupancy will increase.

However, PricewaterhouseCoopers expects RevPAR growth to slow to 3.5 percent in 2001 and 3.8 percent in 2002. Although slower than 2000, these estimates are the highest of any forecasts that have been published by analysts and consultants to date.

"The strength of the economy has been a surprise to everyone, including the leading economic forecasters. GDP is now forecast to increase by 5.1 percent in 2000. Forty percent of a favorable change in GDP is reflected in demand growth in the current quarter, explaining the extraordinary levels of demand so far this year," said Bjorn Hanson, Ph.D., global practice leader, PricewaterhouseCoopers Hospitality & Leisure Practice.

"Our forecast is for slower demand growth during the second half of the year. As we look forward, lodging demand will grow more slowly, but fortunately, so too will new construction," added Dr. Hanson.

PricewaterhouseCoopers is the leader in econometric modelling and providing reliable U.S. lodging industry forecasts. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.

Recently, PricewaterhouseCoopers applied the same econometric modelling to the local level and can now offer forward-looking Market Outlooks. These local forecasts rely on extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions.

PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human resources and financial consulting in North America, Europe, the Middle East and Africa. The group recently formed a partnership with Smith Travel Research.

PricewaterhouseCoopers (www.pwcglobal.com) is the world's leading professional services organization. Drawing on the knowledge and skills of 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.

PricewaterhouseCoopers refers to the US firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization.