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Report: Lodging Supply To Grow in '07

NEW YORK CITY-The real estate sector has been steadily strengthening since 2003 and this year was no different according to Pricewaterhouse Coopers' 2006 US Lodging Industry Briefing.

By Katie Hinderer | Updated on December 14, 2006

NEW YORK CITY-Thursday at Pricewaterhouse Coopers’ 2006 US Lodging Industry Briefing Bjorn Hanson, global hospitality leader for the company, outlined the year’s fundamentals and areas to watch. In general, while many factors remain below all time highs, 2006 lead to further strengthening of the lodging industry as seen by the occupancy, average daily rate and supply.

Occupancy for 2006 rose slightly over last year’s number moving from 63.1% to 63.8%. These numbers are above the average occupancy in 2002, which was 59%, but remained below the long-term trend line of 66.5%. “As occupancy increased we saw an acceleration in supply growth at the same time we’re seeing a deceleration in demand growth. Put these two together, the third quarter 2006 was a little bit scary. We actually had more supply growth than demand,” Hanson said.

The average daily rate has been steadily gaining since 2002. This year ADR grew to a higher level than 1996. Hanson said ADR in 2006 should be about 6.8% compared to 6.4% in 1996. But real ADR, while strengthening, is below 2000 levels. “So in real dollars, as good as we feel about that average daily rent this year, we’re still not back in real dollars to where the industry was in 2000.”

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