The outlook for lower RevPAR growth reflects impacts from three sources: third quarter results that came in lower than anticipated, particularly due to performance in September; a more pessimistic macroeconomic outlook, which now calls for slower growth in the second half of 2012 than previously anticipated; and the effects of Superstorm Sandy. Despite these challenges, lodging demand and, more importantly, pricing, are expected to remain on positive trajectories. Overall, based on the analysis referenced above, PwC expects lodging demand in 2012 to increase 2.9%, which combined with still restrained supply growth of 0.5%, is anticipated to boost occupancy levels to 61.4%, the highest since 2007. While hotels across the spectrum of price tiers are expected to benefit from this recovery, hotels in the higher-priced segments are expected to experience the strongest gains. Occupancy levels at hotels in the luxury, upper-upscale and upscale segments are expected to meet or exceed each segment's pre-recession peak. As stronger business transient and group activity returns to higher-priced hotels, revenue management steps are anticipated to drive increased pricing of available hotel rooms, resulting in a continuation of meaningful RevPAR gains. Hotels in the lower-priced segments have not experienced as solid of a recovery in occupancy, but are still expected to realize increased room rates as demand gradually strengthens.
|Source: PwC and Smith Travel Research.|
"The lodging recovery is being tested by a period of slower economic growth and recent disruptions related to Superstorm Sandy," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. "Despite these challenges, the trajectory of the recovery remains positive and we anticipate higher occupancy levels and stronger average daily rate growth in 2013."