PricewaterhouseCoopers Forecasts Lodging Industry Rebound in 2002

NEW YORK / May 11, 2001--PricewaterhouseCoopers' latest U.S. Lodging Industry Forecast calls for a dramatic increase in RevPAR (Revenue Per Available Room) growth in 2002 to 4.3 percent, compared with the firm's forecast RevPAR growth of 2.8 percent in 2001--the slowest rate of growth since 1992.

The expected recovery is due to the combination of a significant slowdown in supply, coupled with accelerated demand in 2002, as the U.S. economy is expected to recover from its 2001 growth recession.

Lodging industry supply growth slowed from a rate of growth of 3.6 in 1999 to 2.9 in 2000. PricewaterhouseCoopers forecasts this trend will continue with 2.5 percent growth in 2001, and 2.2 percent in 2002. In 2003, PricewaterhouseCoopers forecasts supply will grow by 2.1 percent, the lowest level of supply growth in nine years.

Real Average Daily Rate growth in 2002 is expected to accelerate at 3.9 percent growth, as the economy experiences a slowdown in consumer price inflation. Room occupancy in 2002 is forecast to be 63.2 percent, up from the forecast of 62.9 for 2001.

"While 2001 shows substantial slowing of RevPAR growth, we are optimistic that the industry can recover its growth momentum in 2002," said Bjorn Hanson, Ph.D., global industry partner, PricewaterhouseCoopers.

PricewaterhouseCoopers is the leader in econometric modelling and providing reliable U.S. lodging industry forecasts that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.

In July 1991, PricewaterhouseCoopers predicted a return to profitability for the industry in 1993, and average daily room rates surpassing inflation. In April 1996, PricewaterhouseCoopers issued an early alert that there would be an occupancy decline in 1997. In October 1996, the firm predicted occupancies would decline in 1997. And in September 1997, PricewaterhouseCoopers said room starts would decline in 1998.

Since the spring of 2000, PricewaterhouseCoopers forecasted a U.S. lodging industry slowdown in late 2000 and early 2001.

The firm's research models have recently been refined and enhanced to improve the estimation of future room starts and to enable more precise estimation of the interactions between lodging statistics and the macro economy. They also provide reliable estimates of future lodging statistics of the U.S. at the industry segment, the regional and the local market level.

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. The Market Outlooks are patterned after the structure of the U.S. industry econometric model.

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

With a worldwide network of 7000 professionals, PricewaterhouseCoopers' Financial Advisory Services ("FAS") practice provides creative solutions and ideas that increase value to clients during critical periods and when they are making important decisions that define their future. The FAS business is organized along five product lines. The Business Recovery Services, Dispute Analysis & Investigations, and Corporate Value Consulting product lines are the largest in the world. Our Dispute Analysis & Investigations product line was ranked number one in the US by readers of Euromoney's International Commercial Litigation. The Project Finance & Privatization product line was rated "Advisor of the Year" by Project Finance International, citing the firm's "phenomenal success in securing mandates." The Mergers & Acquisitions product line ranked in the top 10 globally in number of deals completed, according to Securities Data Company. PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organisation. Drawing on the knowledge and skills of more than 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 (www.pwcglobal.com) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 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 member firms of the worldwide PricewaterhouseCoopers organization.