PricewaterhouseCoopers Forecasts an Increase of 3.0 Percent in Average Daily Rate for U.S. Lodging Industry in 2004

Average daily rates in the U.S. lodging industry will rise by 3.0 percent in 2004, according to PricewaterhouseCoopers.

The average daily rate increase is due to a change in inflation from 1.4 to 2.0 percent, a faster than anticipated change in the mix of business verses leisure travel, with a slightly higher proportion of business travel, less "spread" between merchant model price and the rate paid to hotel (PricewaterhouseCoopers research reveals a reduction of almost 5 percent), and more discipline, in part a result of consolidation, in increasing rate in favorable occupancy periods.

"The average daily rate increases are tempering leisure demand slightly," said Bjorn Hanson, Ph.D, global industry leader, PricewaterhouseCoopers, "but this is partially offset by unfavorable exchange rates slightly increasing leisure travelers remaining in the U.S."

PricewaterhouseCoopers research reveals the following positive factors contributing to U.S. lodging demand:

• consumer confidence trending positive
• increases in business travel that began in September, with improvement almost every month
• colder, wetter winter in the Northeast
• sense that room rates will increase in the near future and that current hotel rates are "a bargain"

PricewaterhouseCoopers forecasts occupancy will rise from 59.2 percent in 2003 to 60.8 percent in 2004, and Revenue per Available Room (RevPAR) will increase 5.8 percent in 2004 from $49.19 in 2003 to $52.03 in 2004.