An uptick in business travel and a decrease in the number of new hotels coming on line should lead to rate hikes sooner than expected, according to the latest forecast from PricewaterhouseCoopers.
PwC predicts U.S. occupancy will increase 2.6 percentage points for 2010, reaching 57.2%. Because of that strengthening demand, the pricing outlook for the remainder of 2010, and 2011, has “improved substantially,” PwC said.
PwC said rates should be about flat for the year, with revenue per available room expected to rise 4.1% in 2010.
Next year, rates should rise 4.1% as occupancy climbs to 58.6%. RevPAR will be up 6.7%, PwC predicts.
Although the pace of demand growth is expected to moderate during the second half of 2010, recovery is expected to shift from almost exclusively demand-driven to a mix of demand and room rate growth, which PwC said is a confirmation of the return of the business traveler.
In the first half of 2009, weekday transient demand at higher-priced hotels — a proxy for business travel demand — had fallen 10.6% below 2007 levels, when the industry was the strongest. By the first half of 2010, stronger business travel closed more than half of this gap, to just 3.7% below 2007 performance.