by Michael J. Shapiro | August 29, 2018
Continued growth in U.S. lodging demand contributed to a robust average-daily-rate hike in the second quarter and a rosy forecast for 2019, according to the August edition of Hospitality Directions U.S., a quarterly report from PwC, the professional-services provider and industry analyst. The 2.9 percent year-over-year rate growth for the quarter drove a solid 4 percent increase to revenue per available room. Accelerating group demand, which rose by 2.1 percent year-over-year for the first half of 2018, is one factor that should sustain the industry's record performance, the report noted.
PwC's 2018 outlook now anticipates supply growth of 2 percent for the year, which is the long-term average, and which would be easily surpassed by the forecasted 2.7 percent growth in demand. The report antipates a record occupancy of 66.4 percent this year, with a 2.6 percent gain in ADR driving a 3.3 percent RevPAR increase for the year.
Looking ahead to 2019, PwC predicts supply growth of 1.9 percent, slightly softer demand growth of 1.8 percent, a strong ADR increase of 2.7 percent and a 2.6 percent rise in RevPAR, limited somewhat by flat or slightly decreasing occupancy levels. The forecasted increase in room rates correlates with expected rises in consumer spending, potentially higher group spend and corporate-transient demand.
The report does acknowledge factors that could detract from industry confidence, such as trade tensions with China and the rising costs of labor for entry-level jobs, the latter driven by the low unemployment rate.
Both luxury and independent hotels are expected to perform particularly well this year: The luxury segment could lead all others in performance increases, with a projected ADR gain of 3 percent and a 4 percent rise in RevPAR. The independent segment is close behind, with projected increases of 2.7 percent in ADR and 4 percent in RevPAR. The report forecasts luxury to lead all segments again in 2019, with ADR and RevPAR gains of 3.8 percent and 3.9 percent, respectively.