According to an updated lodging forecast released by PwC, the U.S. anticipates room rate gains to accelerate and drive a RevPAR increase in 2015, as hotels achieve occupancy levels reflecting the solid lodging demand trends of recent quarters. During the first nine months of 2014, both individual and group travel exhibited solid momentum, with the year-over-year pace of recovery in group demand outpacing the individual transient segment.
Increased momentum of group demand growth during Q3 of 2014 is expected to continue in Q4 and into 2015—lodging operators are reporting solid momentum in group pace for 2015. The strong outlook for group demand, coupled with continued strong transient travel activity and a positive economic environment is expected to drive a solid 8.2 percent increase in RevPAR this year. In 2015, supply growth is expected to accelerate, resulting in moderating growth in occupancy. Still, industry-wide occupancy levels are expected to reach 64.9 percent, the highest since 1984.
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 GDP to increase 2.2 percent in 2014, and accelerate to 2.8 percent growth in 2015, measured on a fourth-quarter-over-fourth-quarter basis.
Based on this analysis and recent demand trends, PwC expects lodging demand in 2014 to increase 4.3 percent, which combined with still-restrained supply growth of 0.9 percent, is anticipated to boost occupancy levels to 64.2 percent. PwC’s outlook expects accelerating supply growth of 1.4 percent in 2015, as construction of new hotels gathers momentum (up approximately 40 percent in the third quarter, compared to the same quarter last year).
