Strong industry performance during the fourth quarter of 2016 has set the stage for continued RevPAR growth in 2017, according to the latest forecast from PwC. Promising trends in demand and ADR are in sync with post-election increases in consumer and business sentiment, allowing for optimal economic conditions.
“Based on a strong fourth quarter, we are encouraged by the trends we are seeing as we head into 2017,” says Scott Berman, PwC principal and U.S. industry leader for hospitality and leisure. “However, we remain cautiously optimistic, as higher-than-previously anticipated increase in demand is still expected to be offset by increasing supply through the year.”
PwC anticipates a spike in supply of hotel rooms to slightly outpace growth in demand, which will result in a 65.3 percent occupancy dip. Increases in corporate transient demand and ADR are also expected to cause a RevPAR increase of 2.3 percent. Estimates are based on forecasts from HIS Markit, which also expects a real GDP increase of 2.3 percent in 2017, measured on a fourth-quarter-over-fourth-quarter basis. The estimate is 50 basis points higher than initially reported in PwC’s November forecast.
Updated estimates from PwC are based on quarterly econometric analyses of the U.S. lodging sector, referencing updated forecasts released by IHS Markit and historical statistics.