PwC: Occupancy to reach 20-year high in 2015

Occupancy and other indicators in 2014 and 2015 are expected to show robust performance, according to new projections from PwC and STR. An updated lodging forecast released by PwC US anticipates stronger occupancy gains in 2014, setting the stage for 2015, during which PwC US anticipates the highest occupancy levels in 20 years. As the economy rebounded from a weather-related slowdown in the first quarter of 2014, travel activity picked up significantly in the second quarter, resulting in better than expected occupancy performance, and average daily rate results that were only slightly less than anticipated. While transient travel – both commercial and leisure – continues to show steady gains, hoteliers are reporting strong trends in the group segment, which still has room to recover to peak levels.

This increased momentum of demand growth in the second quarter and a robust summer travel season also resulted in public lodging companies increasing their guidance on revenue per available room growth for the year, according to PwC. This, coupled with continued growth in group demand and steady above-trend economic momentum, supports PwC's expectation of a

solid 7.6 percent RevPAR increase in 2014. In 2015, supply growth is expected to accelerate, resulting in decelerating occupancy growth. Still, industrywide occupancy levels are expected to reach 64.8 percent in 2015, the highest since 1995, giving hotel operators more confidence to push for higher room rates.

PwC expects lodging demand in 2014 to increase 4.0 percent, which combined with still-restrained supply growth of 1.0 percent, is anticipated to boost occupancy levels to 64.1 percent. PwC's outlook expects accelerating supply growth of 1.6 percent in 2015, as construction of new hotels gathers momentum, with supply growth in the higher-priced chain scale segments outpacing growth in the lower-priced segments. 

According to STR and Tourism Economics' revised forecast, demand for U.S. hotels is expected to increase 3.6 percent in 2014. The revised forecast incorporates the unexpected 4.5-percent demand growth during the second quarter, which will lift the full-year demand outlook for 2014.

That strong demand, coupled with a continued lack of new hotel openings, results in a projected occupancy increase of 2.6 percent to 63.8 percent in 2014, according to STR and Tourism Economics.

Average daily rate is expected to increase 4.2 percent to US$115.02 in 2014, while revenue per available room is projected to grow by 6.9 percent to US$73.37.

In 2015, STR and Tourism Economics predict occupancy to rise 0.7 percent to 64.2 percent, ADR to increase 4.4 percent to US$120.13 and RevPAR to grow 5.2 percent to US$77.17. Demand is expected to increase 2.1 percent, and supply is predicted to increase 1.3 percent in 2015.

Originally from: http://www.hotelmanagement.net/industry-fundamentals/pwc-occupancy-to-reach-20-year-high-in-2015-28721?utm_source=newsletter&utm_medium=newsletter&utm_campaign=unknown&utm_content=28721&spMailingID=21350140&spUserID=Njk1OTAwMDc1NDMS1&spJobID=381868553&spReportId=MzgxODY4NTUzS0