PwC’s updated lodging outlook predicts U.S. hotels to gain substantial pricing power in 2015, with more than 80% of the expected 7.4% increase in RevPAR being driven by ADR. The outlook adds that 2015 ADR levels are expected to finally recover past the 2007 peak.
The recovery is due to a combination of factions including a continuing positive demand-supply balance, with demand growth exceeding the increase in available rooms every year since 2010, and an increase use of rate management tools that expand margins.
According to PwC, 2014 was a year of “robust demand recovery,” with the U.S. lodging industry reaching levels it had not seen since 1984. Group demand was the leading cause for peak occupancy levels, with demand increasing at twice the pace at 3.4%. Although demand growth is expected to slow in 2015, it is still anticipated to exceed the interest in supply.