by Michael J. Shapiro | November 14, 2017

Despite the political uncertainty that marked the beginning of this year, and subsequent natural disasters that hammered the country in the third quarter, lodging-industry performance has remained strong, according to the latest edition of PwC's "Hospitality Directions U.S.," released today. The impact of hurricanes Harvey and Irma have been initially positive on the lodging sector - particularly in Houston, where displaced families, FEMA teams and recovery work crews have kept occupancy high. Demand growth has continued to outpace supply increases, and PwC's latest forecast reflects continued optimism for both 2017 and 2018.
 
Supply growth for 2017 should remain just shy of the industry's long-term average, notes the report, increasing by 1.8 percent. At the same time, PwC foresees a robust 2.4 percent increase in demand this year, leading to a full-year occupancy rate of 65.8 percent - 0.6 percent higher than last year's figure. Average daily rate growth is expected to slow to 2.1 percent (compared with last year's 3.1 percent increase), which is still strong enough to be the primary driver of a 2.6 percent bump in revenue per available room.

The forecast calls for relatively strong momentum carried through 2018, with demand growth continuing to outpace supply growth, 2.1 percent to 1.9 percent. That would result in an overall occupancy of 65.9 percent next year, the highest occupancy level since 1981. Relatively flat ADR growth of 2.2 percent is expected to continue to outpace inflation, per the report, driving a RevPAR increase of 2.5 percent. Click on the chart below to see a larger version.