by Michael J. Shapiro | May 22, 2017
First-quarter lodging demand in the U.S. increased at the strongest quarterly rate since the first quarter of 2015, according to PricewaterhouseCoopers, which has bumped up forecasted occupancy for the year. Nevertheless, the analysts have slightly downgraded the anticipated average daily rate growth for the year vs. the previous forecast, which was issued in January. The outlook is based on an economic forecast from IHS Markit, which reflects the belief that the Trump administration will attempt a more modest agenda this year than initially suggested. That could affect previous expectations for tax and regulatory reform.
 
Overall, PwC's forecast remains optimistic. "Despite the on-going post-election partisanship, the US economy currently appears to be on firmer footing, compared to the same period last year," said Scott D. Berman, principal and U.S. industry leader, hospitality and leisure, PwC. "Events such as the presidential inauguration and women's march in January boosted demand for hotel rooms in the greater Washington, D.C., market. This, coupled with other anomalies such as timing of Easter and Passover, contributed to a good start in 2017."
 
The latest forecast calls for a 65.5 percent occupancy rate for 2017, up from the 65.3 percent rate predicted in January. Projected average daily rate, however, has fallen from a 2.6 percent hike to 2.3 percent, as supply growth is expected to eat into pricing power. Projected growth in revenue per available room has remained steady at 2.3 percent. 
 
PwC is now calling for the supply-demand shift to occur in 2018, which could result in the first annual decline in occupancy since 2009. The forecast calls for 65.4 percent occupancy in 2018, along with a 2.2 percent increase in average daily rate and a 2 percent rise in RevPAR. That RevPAR growth would be the lowest in nine years.