PwC: Business travel strength will aid US in 2012

PricewaterhouseCoopers has updated its 2012 U.S. forecast by stating it expects the current upward momentum in business travel to drive the recovery, despite an overhang of macroeconomic uncertainty. In fact, PwC now expects RevPAR growth of 7.8% and 6.5% in 2011 and 2012, respectively.

A full copy of PwC’s US Lodging Forecast can be accessed here.

Lodging demand during the third quarter of 2011 in the U.S. exceeded the previous peak achieved in the first quarter of 2006 by 3.1%, on a seasonally adjusted basis, according to PwC. This strength in demand recovery is expected to continue to drive RevPAR growth.

PwC’s update reflects an improved macroeconomic forecast from Macroeconomic Advisers, LLC, which now anticipates real GDP to grow 1.6% in 2011, with gradual acceleration in the second half of 2012, reaching 3% in the fourth quarter of 2012.

PwC says U.S. lodging demand in 2011 is now expected to increase 4.8%, which combined with restrained supply growth of 0.7%, is expected to boost occupancy levels to 59.9%, the highest since 2007.

However, occupancy gains are expected to be tempered by the uncertain economic environment, which impact pricing discussions at hotels. As a result, ADR is expected to increase by 3.6% in 2011. In 2012, as the economic growth firms up, ADR growth is expected to accelerate to 5.2%, driving a RevPAR increase of 6.5%.

“Continued improvement in travel in general, and the return of corporate meetings and events, particularly in primary U.S. markets, is expected to drive RevPAR recovery in 2012,” said PwC’s Scott Berman. “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.”