Growth Expected to Continue Despite Economic Uncertainty, According to PwC US Lodging Industry Forecast

NEW YORK, Nov. 10, 2011 /PRNewswire/ -- An updated lodging forecast released today by PwC US shows that the momentum of the recovery in the lodging sector is expected to continue in 2012, despite an overhang of macroeconomic uncertainty. The improved outlook is in part due to the recent strength of business travel, which, despite greater uncertainty in the economic outlook, and resultant business and consumer confidence, has recovered strongly. Lodging demand during the third quarter exceeded the previous peak achieved in the first quarter of 2006 by 3.1 percent, on a seasonally adjusted basis. This recent strength in demand recovery is expected to continue to drive revenue per available room (RevPAR) growth in 2011 and 2012. PwC's updated lodging industry forecast now expects RevPAR growth of 7.8 percent and 6.5 percent in 2011 and 2012, respectively.

(Logo:  http://photos.prnewswire.com/prnh/20100917/NY66894LOGO )

PwC's updated quarterly lodging forecast reflects a revised macroeconomic forecast from Macroeconomic Advisers, LLC, which now expects improving economic growth during the remainder of 2011 and in 2012. Macroeconomic Advisers revised upward its forecast for real gross domestic product (GDP) growth in the second half of 2011 for the first time in eight months. As a result of this revision, its outlook now anticipates real GDP to grow 1.6 percent in 2011, with gradual acceleration in the second half of 2012, reaching a 3.0 percent rate in the fourth quarter of 2012.

The improved outlook for the lodging sector reflects the resilience of business travel and corporate events in the face of an uncertain economic environment, as well as a gradually improving economic outlook, premised on continued investment by businesses and improving consumer spending. As a result, lodging demand in 2011 is now expected to increase 4.8 percent, which combined with restrained supply growth of 0.7 percent, is expected to boost occupancy levels to 59.9 percent, the highest since 2007. Increased confidence in occupancy gains is expected to be tempered by a relatively uncertain economic environment, impacting pricing discussions at hotels. As a result, average daily rate (ADR) is expected to increase by 3.6 percent in 2011. In 2012, as the economic growth firms up, ADR growth is expected to accelerate to 5.2 percent, driving a RevPAR increase of 6.5 percent.

"Business travel has recovered strongly, despite a consistent headwind facing the economy.  Continued improvement in travel in general, and the return of corporate meetings and events, particularly in primary US markets, is expected to drive RevPAR recovery in 2012," said Scott D. Berman, principal and U.S. industry leader, hospitality & leisure, PwC. "However, economic factors, both at home and abroad, continue to weigh on the lodging sector, elevating the risk that further disruption or erosion of confidence may impact performance into 2012."

A full copy of PwC's US Lodging Forecast can be accessed by visiting:

http://www.pwc.com/us/en/asset-management/hospitality-leisure/publications/index.jhtml

About the PwC Network

PwC firms help organizations and individuals create the value they're looking for.  We're a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services.  Tell us what matters to you and find out more by visiting us at www.pwc.com.

© 2011 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

SOURCE PwC US