PricewaterhouseCoopers Forecasts Significant Reduction in RevPAR
FEBRUARY 2, 2009 - PricewaterhouseCoopers LLP (PwC) announced a revised lodging forecast that illustrates the effects of the sharp deceleration of the U.S. economy on the U.S. lodging industry.
Based on current forecasts for the U.S. economy, and historical data from Smith Travel Research, PricewaterhouseCoopers forecasts an 11.2 percent decrease in room revenue per available room (RevPAR) during 2009, after a 1.9 percent decline in 2008.
PricewaterhouseCoopers' revised lodging forecast reflects updated macroeconomic factors. After a moderate decline in GDP growth in the third quarter of 2008, the U.S. economy contracted substantially in the fourth quarter and is expected to continue to contract into the first quarter of 2009, with GDP growth resuming in the second quarter and reaching above-trend growth by 2010.
According to PricewaterhouseCoopers' revised lodging forecast, the 11.2 percent decline in RevPAR in 2009 is driven by marked declines in both occupancy and average daily room rates (ADR). Occupancy is expected to decline by 3.9 percentage points to 56.5 percent, primarily due to year-over-year declines in demand through the third quarter of 2009. Reduced pricing power, combined with a reduction in the share of lodging demand being accommodated by hotels in the higher-priced room rate categories, is forecasted to reduce ADR by 5.2 percent in 2009.
"The sharp deceleration in the U.S. economy and the expectations of a more severe, and prolonged recession have had a swift impact on the lodging industry. Although the lodging industry is expected to continue to experience the effects of the overhang of the economic uncertainty throughout 2009, slower supply growth coupled with the beginning of recovery in demand is expected to stabilize occupancy levels by the fourth quarter," said Scott D. Berman, principal and U.S. Industry Leader - Hospitality & Leisure for PricewaterhouseCoopers.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
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