PwC Hospitality Directions US: August 2019

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The US lodging industry appears to be at an inflection point, driven by a combination of decelerating demand as well as continued economic and global trade risks.

Recent weak performance and decelerating forward trends suggest a continued deceleration in top line performance through at least next year.

  • Second quarter results came in significantly below expectations - with ADR levels up 1.2 percent, and occupancy levels down 0.1 percent, resulting in a tepid RevPAR increase of 1.1 percent.
  • Mitigating a steep decline in group occupancy levels was mild growth in transient demand, as well as strong growth in the contract segment.
  • Between flattening occupancy and an overall lack of pricing power, RevPAR grew at a modest level, as hotels traded occupancy for rate. US lodging performance continued to experience headwinds in July, characterized by anemic RevPAR growth.
PwC Hospitality Directions

Looking ahead to the remainder of 2019, the near-term lodging outlook remains choppy, with unemployment expected to reach a cyclical low by the end of this summer at around 3.5 percent. Other predictions:

  • decelerating GDP growth
  • softening in consumer spending.
  • In 2020, lodging supply and demand growth are expected to moderate, resulting in a very slight decline in occupancy.
  • Rising inflation levels are expected to support marginal growth in ADR, resulting in an expected RevPAR increase of 1.0 percent, the lowest in a decade.
Counter-balances to this outlook include:
  • The above outlook is challenged by continued trade tensions and effects from tariff-rate implementation
  • political uncertainty both domestically and abroad,
  • slowing economic growth
  • and pressure on inbound leisure travel from China due to the devaluation of the Yuan.
Q2 2019 Hospitality Directions

About Hospitality Directions

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

  • strategic planning and capital
  • allocation purposes
  • demand and supply
  • occupancy
  • average daily rate
  • revenue per available room

Contact us

Steven J. Barr

Consumer Markets Leader, PwC US

Eric Shin

Consumer Markets Tax Leader, PwC US

Ron Kinghorn

Consumer Markets Advisory Leader, PwC US

Melissa Palmer

Consumer Markets Assurance Leader, PwC US

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