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Lodging Outlook Is Bleak for 2001

NEW YORK CITY-PricewaterhouseCoopers expects room demand to increase only 1.9% for the year and average daily rates to move up 3.8%, the worst performance since 1993. Prospects look better for 2002.

By John Howe | Updated on March 22, 2001

NEW YORK CITY-The lodging industry is in for its weakest performance in years, according to PricewaterhouseCoopers, which is forecasting the lowest revenue per available room since 1992. The firm projects that demand for rooms will increase just 1.9% in 2001, and that average daily rates will move up by 3.8%. Those are the most sluggish growth rates since 1993.

What’s more, the professional services/consulting organization, anticipates occupancy will slip to 62.9%, and RevPar will grow by only 2.8%, slightly above the rate of inflation. “Even with the US economy’s performance, we believe the lodging industry will experience profit growth in 2001, but that growth of 4.6% to $25 billion will be the smallest since 1992,” says Bjorn Hanson of PricewaterhouseCoopers’ hospitality and leisure practice. “The industry is currently operating at a substantial premium to break-even occupancy with high profit margins following a decade of restructuring,” he adds.

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