PwC has released its latest forecast on the U.S. lodging industry through 2023. The omicron COVID variant in the beginning of the year hindered the recovery timeline but the analytics company expects continued improvement in top-line metrics for U.S. hotels for the remainder of 2022 and next year.
“While leisure travel continued to drive much of lodging’s demand in Q1, individual business travel and group business has started to emerge as we head into the warmer months,” the report said. “Strong leisure business is expected to cause demand compression over the summer, driving room rates and resultant [revenue per available room] levels to new highs.”
PwC predicts a stronger Q4 of 2022 dependent on immunity levels and an improved situation in Ukraine. “We expect annual occupancy for U.S. hotels this year to improve slightly from our November 2021 outlook, increasing to 63.1 percent. As in our last outlook, the big story remains room rates. Average daily room rates surpassed comparable 2019 levels in every month of Q3 and Q4 last year, and in February, March and April this year (January missed by 28 cents). RevPAR in March and April exceeded comparable 2019 levels, and this is expected to continue through the forecast period. We now expect average daily room rates to increase 16.9 percent for the year, with resultant RevPAR up 28.1 percent—approximately 106 percent of pre-pandemic levels, on a nominal dollar basis.”
For next year, PwC expects demand growth from individual business travelers and groups to offset a potential softening in leisure demand: “Growth in both occupancy and ADR is expected, with a year-over-year rebound in RevPAR of 6.6 percent—approximately 114 percent of prepandemic levels.”