According to PricewaterhouseCoopers' latest forecast, the U.S. lodging industry can expect occupancy to increase to 64.2 percent in 2006, the highest since 1996, and average daily rate (ADR) is forecast to increase by 6.9 percent, for a combined revenue per available room (RevPAR) growth of 8.7 percent. The forecast increase in RevPAR for 2006 is the largest since 1980, when the industry's RevPAR increased by 12.6 percent. The PricewaterhouseCoopers forecast is based on September macroeconomic assumptions for more robust growth in 2006 than previously forecast by most economists.

“The lodging industry continues to benefit from a surprisingly slow rate of supply growth for this phase of the cycle, and a robust economy that, despite higher energy prices, is supporting growth in personal consumption expenditures,” says Bjorn Hanson, Ph.D. and principal, Hospitality and Leisure practice, PricewaterhouseCoopers. “At the same time, inflationary pressures allow hoteliers to exercise double-digit increases in room rates in many lodging markets.”

PricewaterhouseCoopers' subscription service for twelve major markets – Atlanta, Boston, Chicago, Dallas, Hawaii, Orlando, Los Angeles, Miami, New York, Philadelphia, San Francisco, Washington DC – reflects RevPAR growth in those markets will range from 4.7 percent to 9.0 percent in 2007, with Los Angeles, Orlando, Washington DC and Hawaii experiencing the smallest, but still impressive, increases. In contrast with other recent forecasts reported by some sources, PricewaterhouseCoopers does not forecast a RevPAR decline in any of these markets.

PwC's 2007 forecast predicts a slowdown of room demand growth reflecting the overall economic slowdown precipitated by a combination of a weakening housing market, higher interest rates, higher energy prices, and moderating equity market gains. Inflationary pressures are also forecast to moderate, which together with the acceleration in room supply additions, will result in RevPAR growth of 5.9 percent, still only 0.2 percent lower than the rate achieved in 2000. Occupancy in 2007 is forecast to increase to 64.3 percent, an increase of 0.1 occupancy points, compared with the 1.1 occupancy point gain in 2006.