| |
| |
One moment, please... we are searching the news archive.
|
|
|
Hotel Industry News |
Saturday November 22nd, 2008 |
 |
Slowing Macroeconomic Fundamentals Place Downward Pressure on Lodging Demand in First Half of 2001 |
|
|
NEW YORK--(BUSINESS WIRE)--Jan. 18, 2001--
Recent economic releases by the government and private organizations revealed clear signs of a substantial weakening of the U.S. economy during the fourth quarter of 2000. They also indicated the possibility of a continued growth recession through the first quarter of 2001. As a result, lodging room demand will slow to lower levels than originally anticipated, according to PricewaterhouseCoopers' Hospitality & Leisure practice. However, lodging demand growth will begin to rebound in the second half of 2001.
Real GDP growth is forecast to slow 1.3 percent in the first quarter of 2001 and 2.7 percent in the second quarter of 2001, according to Macroeconomic Advisers. Real GDP is forecast to grow by 3.8 percent by the fourth quarter of 2001. PricewaterhouseCoopers forecasts lodging demand growth will slow to 2.1 percent in the first quarter of 2001 and 1.1 percent in the second quarter of 2001. However, demand growth will rebound to 2.6 percent in the third quarter of 2001 and 2.5 percent in the fourth quarter of 2001.
The Federal Reserve Board's January 3 surprise 50 basis-point cut of the federal funds rate and the much anticipated additional interest rate cut during the January 30-31 Fed meeting will contribute to a recovery in the economy's momentum at the end of 2001 and into 2002. Other underlying economic factors also support optimism for the second half of 2001 and include the following:
-- Capital expenditures are expected to recover as companies internalize the interest rate cuts towards the end of the year and excess inventories are depleted, with the inventories to sales ratio returning closer to its recent lows. (The current inventories to sales ratio at 1.35 is still below the 1.41 average of the current expansion that started in the second quarter of 1991.)
-- Non-threatening inflationary pressures, excluding energy, allow further cuts by the Fed should the cuts be warranted to boost aggregate demand.
-- Energy prices are expected to decline in the spring of 2001 following an unusually cold winter, boosting personal disposable income. The price of imported crude oil is now forecast to reach $25.5 per barrel by the end of the year, down from $30 per barrel during the fourth quarter of 2000.
-- The conventional mortgage rate fell by 18 basis points to 6.89 percent in the second week of January. This decline, which continues on a trend that started last May, further portents increased private fixed investment.
Economic releases in late December reveal unmistakable signs of further weakening in the economy, with many weak corporate earnings reports, growing inventories and lower consumer confidence levels, a decline in real construction spending and a rise in unemployment claims, said Bjorn Hanson, Ph.D., global hospitality and leisure industry partner, PricewaterhouseCoopers. However, (move up next line) we believe that the underlying economic fundamentals, despite some recent negative releases, still point to an economy with the potential to regain some of its strength.
PricewaterhouseCoopers forecasts a 0.5 point decline in occupancy in 2001 with RevPAR growth slowing to 3.1 percent in 2001, from 5.5 percent in 2000. RevPAR growth is projected to increase to 4.3 percent in 2002 as the economy recovers some of its momentum.
PricewaterhouseCoopers is the leader in econometric modelling and providing reliable U.S. lodging industry forecasts that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.
In July 1991, PricewaterhouseCoopers predicted a return to profitability for the industry in 1993, and average daily room rates surpassing inflation. In April 1996, PricewaterhouseCoopers issued an early alert that there would be an occupancy decline in 1997. In October 1996, the firm predicted occupancies would decline in 1997. And in September 1997, PricewaterhouseCoopers said room starts would decline in 1998.
The firm's research models have recently been refined and enhanced to improve the estimation of future room starts, to enable more precise estimation of the interactions between lodging statistics and the marcroeconomy, and to provide reliable estimates of future lodging statistics of the U.S. at the industry segment, the regional, and the local market level.
Recently, PricewaterhouseCoopers applied the same econometric modelling to the local level and can now offer forward-looking Market Outlooks. These local forecasts rely on extensive lodging data collection, empirical studies and solid econometric models to support all positions and conclusions. The Market Outlooks are patterned after the structure of the U.S. industry econometric model.
PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human resources and financial consulting in North America, Europe, the Middle East, Africa and Asia Pacific. The group has a partnership with Smith Travel Research.
With a worldwide network of 7000 professionals, PricewaterhouseCoopers' Financial Advisory Services (FAS) practice provides creative solutions and ideas that increase value to clients during critical periods and when they are making important decisions that define their future. The FAS business is organized along five product lines. The Business Recovery Services, Dispute Analysis & Investigations, and Corporate Value Consulting product lines are the largest in the world. Our Dispute Analysis & Investigations product line was ranked number one in the US by readers of Euromoney's International Commercial Litigation. The Project Finance & Privatization product line was rated Advisor of the Year by Project Finance International, citing the firm's phenomenal success in securing mandates. The Mergers & Acquisitions product line ranked in the top 10 globally in number of deals completed, according to Securities Data Company. PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organisation. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.
PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.
PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.
CONTACT: PricewaterhouseCoopers
Wendy Determan
212/596-5079
wendy.j.determan@us.pwcglobal.com
|
|
|
 |
|
 |
|
|
Contact Information:
1177 Avenue of the Americas
USA - New York, NY 10036
Phone: 646 471 5706
Fax: 646 471 8869
Click for Website
|
|
PricewaterhouseCoopers is the world's largest professional services organization. Drawing on the knowledge and skills of more than 125,000 people in 142 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. |
|
|
|
Post Release
Get Content
Email News Brief
Saved Articles
Advertising
Handheld
XML/RSS
Post News