Despite an initial pull back in the recovery timeline caused by a surge in infections from a new omicron variant of the COVID-19 virus in December and January, continued improvement in top line metrics for US hotels is expected for the remainder of this year and next. 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. Strong leisure business is expected to cause demand compression over the summer, driving room rates and resultant RevPAR levels to new highs. If tensions ease in Ukraine, and immunity levels continue to increase domestically, a stronger Q4 driven by a resurgence in business transient and group demand is expected. We expect annual occupancy for US hotels this year to improve slightly from our November 2021 outlook, increasing to 63.1%. 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 $0.28). 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% for the year, with resultant RevPAR up 28.1% - - approximately 106% of pre-pandemic levels, on a nominal dollar basis.
“Despite volatility in the financial markets and heightened concerns over the humanitarian crisis in Ukraine, we now expect US hotels to surpass 2019 RevPAR levels this year, driven by strong growth in room rates stemming from focused revenue management strategies of operators.”
PwC Hospitality Directions US is a near-term outlook for the U.S. lodging sector, commonly used by industry decision-makers and stakeholders to better understand the impact of policy and other macro-environmental factors on the sector’s operating performance. Our outlook includes metrics for the overall sector as well as for the chain scales, and is used by our clients for
US Hospitality & Leisure Practice Leader, PwC US
US Hospitality & Leisure Managing Director, PwC US