PwC: Industry records lowest Q1 RevPAR growth since 2010

Hotel Guestroom
In Q1 2019, a 0.4 percent rise in occupancy and 1.1 percent increase in ADR led to the lowest first-quarter growth in RevPAR, 1.5 percent, since 2010. Photo credit: iStock / Getty Images Plus / DragonImages

Q1 revenue-per-available-room growth dipped to its lowest point since 2010 this past quarter, according to PwC’s "Hospitality Directions US" report. Despite the results coming in “below expectations,” the company said the industry looks like it will stay “on stable footing through 2020.”

One specific concern the analysis cited was the industry’s March performance. Despite a favorable calendar comparison due to an early Easter this year, occupancy remained flat and average-daily-rate-driven RevPAR rose only 0.6 percent that month. Overall for the quarter, occupancy rose 0.4 percent and ADR increased 1.1 percent, together driving 1.5 percent growth in RevPAR.

Looking at the rest of the year: PwC expects unemployment to hit 3.5 percent this summer; gross domestic product growth to continue, but decelerate; inflation to rise, albeit tepidly; and consumer spending to soften, but keep growing. Supply growth, it said, will rise at a rate just above the long-term average and RevPAR growth, driven almost entirely by ADR, will continue to decelerate.

In 2020, PwC expects lodging supply and demand growth will moderate, leading to a very slight decrease in occupancy levels. With slightly higher inflation levels expected to support rising ADR, the company forecasts RevPAR to grow 1.8 percent year-over-year in 2020.

Some things the report said to look out for included continue trade tensions, effects from possible tariff-rate implementation, increased political uncertainty, slowing economic growth and tempered investor confidence.