US Hospitality Directions: November 2019

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Below inflationary growth in RevPAR plagues US lodging industry

Third quarter results continued to disappoint - once again coming in below expectations, with RevPAR growth of just 0.7 percent. Lodging supply growth outpaced demand in the quarter, resulting in a 0.1 percent decline in occupancy levels. A slight increase in transient demand failed to off-set declines in the group and contract segments. While RevPAR increased during the quarter, it was the lowest year-over-year growth since the beginning of the US lodging industry’s recovery from the Great Recession, and the only quarter in the current lodging cycle with a RevPAR increase below 1.0 percent.

“Challenges to the outlook include tempered investor confidence and political uncertainty both domestically and abroad, leading up to the presidential election.”

Warren Marr, US Hospitality & Leisure Managing Director

Trends and highlights

  • Although US hotels have experienced RevPAR increases in 112 of the last 115 months, growth continues to decelerate, with two of the three declines coming in June and September of this year. Looking ahead to the final quarter of 2019, the near-term lodging outlook suggests continued deceleration in top line metrics.  Weak demand and a general lack of pricing power in October supports this outlook.
  • In 2020, despite an expected boost to lodging demand from the upcoming presidential election, supply is expected to exceed demand growth, resulting in a minor decrease in occupancy levels. Rising inflation is expected to help support what is still expected to be decelerating ADR growth, resulting in a marginal RevPAR increase of 0.5 percent.

Our outlook for 2020 anticipates

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

Scott Berman

US Hospitality & Leisure Practice Leader, PwC US

Warren Marr

US Hospitality & Leisure Managing Director, PwC US

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