Finance & DevelopmentFinancePwC Forecasts Elevated Consumer Confidence, Lodging Demand

PwC Forecasts Elevated Consumer Confidence, Lodging Demand

New York–Encouraged by the prospect of a strengthening economy, U.S. lodging performance continued to improve in the first quarter of 2017 according to the updated lodging forecast by PwC. Despite a weak first quarter GDP growth estimate of 0.7 percent, lodging demand increased at the strongest quarterly rate since the first quarter of 2015, supporting modest growth in both occupancy and average daily rate (ADR). Overall, revenue per available room (“RevPAR”) increased 3.4 percent.

Reinforced by rising employment, higher real income, and increased household net worth, consumer confidence and sentiment remain elevated. For the remainder of 2017, U.S. lodging performance is projected to temper, as peaking supply growth is expected to place increased pressure on pricing power. A shift in the supply-demand balance in 2018 is anticipated to result in the first annual decline in occupancy, albeit minor, since 2009. Average daily rate growth of 2.2 percent is expected to drive an increase in RevPAR of 2.0 percent, the slowest growth rate in nine years.

The updated estimates from PwC are based on a quarterly econometric analysis of the U.S. lodging sector, using an updated forecast released by IHS Markit and historical statistics supplied by STR and other data providers.