PwC Downgrades 2010 Hotel Forecast Again, Despite Positive Signs

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PwC Downgrades 2010 Hotel Forecast Again, Despite Positive Signs

By Michael B. Baker

NOVEMBER 06, 2009 -- PricewaterhouseCoopers today continued to move its U.S. lodging industry expectations downward, although the firm said industry performance indicates the initial stages of economic and lodging demand recovery.

For 2009, PwC now expects revenue per available room to drop 16.4 percent and average daily rate to drop 8.8 percent compared with 2008 levels. These are slightly larger than the forecasted 16.1 percent and 8.7 percent respective decreases the firm issued in September (BTNonline, Sept. 10).

While both of those metrics will continue to move slightly downward in 2010, occupancy will begin to recover next year, according to PwC. After falling to 55.2 percent this year, PwC said full-year occupancy in 2010 would increase slightly to 55.8 percent. This recovery is slightly less than the 56.1 percent level the firm predicted in September.

"Barring any unforeseen circumstances from an operating perspective, the worst appears to be over," according to Scott Berman, PwC principal and U.S. industry leader for hospitality and leisure. "To what degree the industry experiences recovery is predicated on an improving economy, which facilitates lodging demand growth and operators' abilities to achieve higher pricing."

The firm also slightly increased the levels at which rate and RevPAR will decrease in 2010, although those drops still remained moderate compared to what happened this year. PwC today said average daily rate will drop 1.8 percent and RevPAR by 0.7 percent compared with this year's levels. The early forecast said they would drop by 1.1 percent and 0.1 percent, respectively.

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