by Michael J. Shapiro | September 01, 2015
U.S. hotel occupancy was at its highest level since 1987 in the first half of 2015, noted PricewaterhouseCoopers in its August Hospitality Directions US report, while average daily rate growth drove revenue per available room to a greater degree than previously. All factors contribute to PwC's continued rosy forecast for 2015 and 2016.

Both group and transient demand continue to surge, PwC reported, with respective year-over-year increases of 1.5 and 1.4 percent. The trend in demand, paired with low supply growth, has PwC calling for occupancy to reach 65.6 percent for 2015, the highest since 1981. The report calls for a RevPAR increase of 6.9 percent for the year, consistent with the previous forecast and driven by continued growth to average daily rate, which PwC expects to increase by 5 percent.

PwC forecasts a 2 percent supply growth in 2016, which would surpass the long-term average of 1.9 percent for the first time in seven years. Occupancy levels should stabilize as a result, but a whopping average daily rate increase of 5.8 percent next year should continue to drive a significant RevPAR increase of 5.9 percent.

Rate growth is expected to be particularly strong in the luxury chain scale segment, with a year-over-year increase of 6 percent this year and 6.3 percent in 2016. Upper upscale ADR is forecast to grow by 5.1 percent this year and 5.9 percent in 2016.