PWC Forecasts Record Occupied Rooms for Summer

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. October 14, 2008

MAY 29, 2007. According to PricewaterhouseCoopers LLP, the U.S. lodging industry will achieve a new record number of occupied rooms per night of 3.14 million this summer. The previous record of 3.08 million occupied rooms per night was achieved in 2006.

The summer occupancy in 2007 is forecast to be slightly lower than 2006, 69.6 percent, the second-highest since the peak of 72.1 percent in 2001 and approximately a percentage point below the 70.2 percent occupancy in 2006.

Occupancy levels for the three-day Memorial Day and Labor Day weekends will be 73.9 percent and 70.1 percent, highest since 2000 and 2004, respectively. The occupancy for the five-day weekend of the fourth of July, which falls on a Wednesday this year, is expected to be dispersed between the prior and later weekends, resulting in an occupancy of 69.2 percent.

According to PricewaterhouseCoopers, the effect of increased gasoline prices on room night demand will be pronounced in 2007, with gasoline-induced occupancy declines concentrated in the second, third and fourth quarters of 2007. Between Memorial Day and Labor Day, an additional 10 percent or approximately 30 cents per barrel increase in the price of gasoline will result in approximately 8,000 fewer occupied rooms per night, or 0.2 occupancy points. There is also emerging price resistance following hotel average daily rate increases of 5.5 percent and 7.1 percent in 2005 and 2006, respectively, based on Smith Travel Research data.

"This summer will be another great season for the lodging industry, although not another record year, as increasing supply exceeds demand growth during the summer for the first time in four years," says Bjorn Hanson, Ph. D., principal, Hospitality & Leisure practice, PricewaterhouseCoopers LLP.