Average Daily Rate Growth Continues to Lag Expectations, Despite Peak Occupancy Levels, says PwC US
An updated lodging forecast released today by PwC US expects revenue per available room (“RevPAR”) growth in 2015 to be driven more by occupancy than RK, November 11, 2015 – previously expected, as average daily rate (“ADR”) growth continues to look for a firm footing. Recent performance of the lodging industry has surprised industry participants, as solid ADR growth has struggled despite peak occupancy levels, which was expected to have given operators the confidence to drive targeted price increases in many markets. As a result of continued pricing challenges, the outlook for 2015 is reduced moderately, to a RevPAR increase of 6.5 percent, driven by lower-than-previously-expected ADR growth. In 2016, PwC expects RevPAR to grow 5.7 percent, driven by ADR.
The estimates from PwC are based on a quarterly econometric analysis of the lodging sector, using an updated forecast released by Macroeconomic Advisers, LLC in October, and historical statistics supplied by STR and other data providers. Macroeconomic Advisers expects real gross domestic product (“GDP”) to increase 2.2 percent in 2015, followed by a 2.5 percent increase in 2016, measured on a fourth-quarter-over-fourth-quarter basis.