As Current Cycle Matures, Hotel RevPAR Growth Decelerates According to PwC US
Supply Growth Moves Above Long-Term Average in 2017
Occupancy levels at US hotels have begun to stabilize after reaching peak levels in 2015, according to Hospitality Directions, the lodging forecast released today by PwC US. Coming off the heels of a lackluster performance for the US lodging sector in Q4 2015, average daily rate ("ADR") growth in the first quarter was the lowest since Q4 2013. While overall demand conditions in the US are expected to remain positive, driven, in part, by firming group travel, increasing supply growth is expected to contribute to stabilizing occupancy levels. Average daily rates are expected to continue to increase, but at a slower pace than previously expected, impacted, in part, by lower growth in the overall economy. The estimates from PwC are based on a quarterly econometric analysis of the lodging sector, using an updated forecast released by Oxford Economics in May and historical statistics supplied by STR and other data providers.
Oxford Economics expects real GDP to increase approximately 1.9 percent in 2016, measured on a fourth-quarter-over-fourth-quarter basis, driven by a number of factors, including solid labor market gains, stronger consumer spending, accelerating housing activity, and low inflation rates, partially offset by constraints on business investment.
"Despite a weaker than expected first quarter, overall demand for hotels in the US is expected to remain strong," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. "And with economic growth anticipated for the remainder of the year, we expect room rates to reset to local market conditions."
About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 195,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.