national hotel occupancy average is projected to hit 64.2% this
year, the highest occupancy average in a decade, according to a new
forecast by PricewaterhouseCoopers.
Over the past 12
months, the occupancy average has been at 63.7%; the average
occupancy typically doesn't push past 59% or 60%. The
higher-than-average occupancy is expected to bolster RevPAR, a key
economic indicator for hotels, by 8.7%, the highest level since
1980, when RevPAR rose 12.6%.
The firm's research
indicates that in 12 major city markets RevPAR is expected to grow
from 4.7% to 9% next year.
increase in RevPAR and the increase in occupancy are both good news
for the hotel industry, which has been riding high for several
"The lodging industry
continues to benefit from a surprisingly slow rate of supply growth
for this phase of the cycle and a robust economy that, despite
higher energy prices, is supporting growth in personal consumption
expenditures," said PWC's Bjorn Hanson. "At the same time,
inflationary pressures allow hoteliers to exercise double-digit
increases in room rates in many lodging markets."
occupancies and RevPAR notwithstanding, PWC is forecasting an
eventual slowdown due to a rise in room supply and a softening in
That is expected to
begin next year as the overall economy loses some steam due to a
projected weakening of the housing market, higher interest rates
and energy costs. As a result, the national hotel occupancy average
is expected to inch up only slightly, to 64.3%, in 2007.
One place where
hotels are earning less is on telephone service.
popularity of wireless phones and other communication devices has
resulted in a 16% decline, compounded annually, since 2000 in the
revenues derived from telecommunications services.
PWC found that the
telecom revenue earnings per occupied room dropped from $4.96 in
2000 to $2.26 in 2005.
To compensate, hotels
have tacked on fees and surcharges, which over the past six years
have compounded the decline in revenue by as much as 14.5% in
full-service hotels and 17.8% in their limited-service