PwC: Growth still on the horizon for U.S. hotels through 2019

As the United States hotel industry heads into the latter half of the year and into 2019, the forecast for average-daily-rate growth remains steady. But revenue-per-available-room growth will become more important as hotels continue to feel pressure from rising insurance costs, labor costs and other expenses, according to PwC’s May Hospitality Directions US and its most recent updated lodging outlook.

Occupancy is at record levels, and PwC expects an uptick in commercial transient midweek demand and strength in consumer spending will help to grow room rates. As a result, the firm forecasts that ADR-driven RevPAR will grow 3 percent in 2018. This growth should help hotel operators with better flow-through to offset rising costs.

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PwC’s outlook for 2018 includes:

  • Continued supply growth of 2 percent
  • Record occupancy of 66.3 percent
  • RevPAR growth of 3 percent

Meanwhile, PwC predicts 2019 will show:

  • Continued supply growth of 1.9 percent
  • Demand growth will decelerate to 1.9 percent
  • RevPAR growth of 2.8 percent

“Looking ahead to 2019, there is an expectation of gradual strengthening in rate growth as we move through the year. The impact of the Tax Cuts and Jobs Act is expected to drive more commercial transient demand to hotels, at higher prices than those paid by the midweek leisure customer,” according to the report.

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The unemployment rate, which is less than 4 percent; immigration policies; and rising wages in the hotel sector and the economy at large could counteract the positive effects expected from the Tax Cuts and Jobs Act, however. PwC posits that these factors could strain economic growth and potentially shift hotel operators to focus on risk protection if there happens to be a decrease in commercial transient travel.

Chain Scale Outlook

Chain scales this year will continue to grow RevPAR, according to PwC’s analysis based on STR data. Likewise, chain scales are expected to grow RevPAR in 2019, albeit at a slower rate (see below).






+4.8 percent

+3.1 percent


+1.4 percent

+1 percent


+1.9 percent

+0.7 percent


+2.7 percent

+1.8 percent


+3.2 percent

+2.6 percent


+3.9 percent

+2.6 percent


+3.4 percent

+1.6 percent

Total U.S.

+3 percent

+2.8 percent

RevPAR growth for U.S. chain scales. Source: PwC, based on STR data


PwC predicts that the total U.S. hotel industry demand will grow 2.4 percent, while supply will grow 2 percent in 2018. Upper-midscale hotels are expected to lead the charge in demand growth (+4.7 percent) this year, while upscale hotels will grow supply the most (+4.3 percent).  Economy hotels will see the least growth in both metrics this year, with demand growing 0.5 percent and supply increasing 0.1 percent.

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In 2019, demand and supply are both expected to grow 1.9 percent for the total U.S., according to the report. Upscale hotels are forecast to lead in both demand (+4.5 percent) and supply (+5.9 percent) growth. Luxury and economy hotels will see the smallest demand growth (+0.2 percent) of the chain scales, with economy hotels also increasing supply the least (+0.1 percent).