PricewaterhouseCoopers
For
First Time in 32 Years, Lodging Industry Annual Nominal RevPAR Will
Decline in 2001
NEW YORK--(BUSINESS
WIRE)--July 18, 2001
PricewaterhouseCoopers forecasts that fourth quarter RevPAR(revenue per
available room) growth will be insufficient to result in positive RevPAR
growth for the full year 2001.
For the year, PricewaterhouseCoopers forecasts RevPAR to decline 0.3
percent from 2000 levels. The statistical range of the forecast includes
values slightly above 0. This forecast is highly dependent on the GDP
growth forecast of 1.8 for 2001 by Macroeconomic Advisers.
PricewaterhouseCoopers forecasts a RevPAR decline in the second quarter,
which had been anticipated, following growth of 3.4 percent in the first
quarter (according to Smith Travel Research). The second quarter decline
will be steeper and is forecast to be followed by another quarter of
RevPAR decline of 2.1 percent in the third quarter. PricewaterhouseCoopers
forecasts that RevPAR in the fourth quarter of 2001 will improve by 0.3
percent from the same period a year ago; the slight rebound will likely
not be strong enough to offset the declines in the second and third
quarters.
Annual nominal RevPAR declined only once in the last 32 years for which
data are available. RevPAR fell 2.4 percent in 1991 when the last US
recession and the Persian Gulf War depressed lodging demand and room
rates. The severity of the lodging demand downturn in the second quarter
of 2001 is a reflection of the depth of the current "corporate
profits recession". The poorest profit performance in seven years
underlies some of the major weaknesses in the economy: decreased fixed
investment on equipment and software, employment reductions, and broad
decreases in corporate spending.
Consumer or leisure demand and average rates have remained strong compared
with business and group demand and rates, but may soften slightly as
unfavorable earnings reports, stock market volatility and unemployment
reports continue to be negative. The continuing weak second and
anticipated third quarter corporate earnings reports will reinforce
weakness in the business and group segments. Rates have been supported by
corporate rate agreements and meeting contracts made last year, and as
these agreements are negotiated for 2002, there will be additional
downward pressure on rates.
PricewaterhouseCoopers continues to forecast that 2002 will be a year of
recovery with RevPAR increasing by 2.6 over 2001.
PricewaterhouseCoopers is the leader in econometric modeling 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.
In January 2000, PricewaterhouseCoopers forecasted a U.S. lodging industry
slowdown in late 2000 and early 2001.
The firm's research models have recently been refined and enhanced to
improve the estimation of future room starts and to enable more precise
estimation of the interactions between lodging statistics and the macro
economy. They also 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 modeling 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.
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Contact Information
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.
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, 646/471-5079
wendy.j.determan@us.pwcglobal.com
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