PwC predicts ongoing RevPAR recovery in 2012, 2013

Despite economic risks associated with a recovery and the European sovereign debt crisis, an updated lodging forecast released Monday by PwC US anticipates RevPAR recovery in 2012 to remain intact, with stronger price gains anticipated in 2013.

U.S. business and leisure travel posted solid gains in the first four months of 2012, PwC reported, and even the group segment experienced an uptick in demand and bookings. As a result of continued recovery in demand, U.S. RevPAR is expected to increase 6.5% in 2012 and 5.6% in 2013, building on the 8.2% increase in 2011.

PwC’s updated estimates are based on a quarterly econometric analysis of the lodging sector using historical statistics supplied by Smith Travel Research and other data providers and an updated macroeconomic forecast released in May from Macroeconomic Advisers LLC, which expects moderate economic growth in 2012 followed by acceleration in the second half of 2013. Macroeconomic Advisers’ outlook expects real GDP to increase 2.5% in 2012 followed by an increase of 3.1% in 2013, measured on a fourth quarter-over-fourth quarter basis.

According to PwC, the outlook for RevPAR recovery reflects continued momentum in business travel, including gains in corporate meetings as well as leisure travel growth, which includes greater volumes of international visitors. As a result, lodging demand in 2012 is expected to increase 2.5%, which combined with still restrained supply growth of 0.4% is expected to boost occupancy levels to 61.3%, the highest since 2007. Increased confidence from occupancy gains is expected to allow hotels to raise room rates, particularly in the higher-priced segments of the industry. As a result, ADR is expected to increase 4.3% in 2012 and 4.8% in 2013.

“A sense of momentum is evident, confirming our expectations for continued RevPAR growth,” said Scott Berman, principal and U.S. industry leader, hospitality and leisure, PwC. “With the steepest portion of the demand recovery behind us and occupancy rates returning to more normal levels, hotel operators are focusing on opportunities to win and serve customers while resetting room rates.”