PwC Predicts Hotel RevPAR to Exceed Pre-Pandemic Levels This Year | Business Travel News

Rising average
daily hotel room rates are expected to drive 2022 RevPAR above 2019 levels, according
to the May 2022 Hospitality Directions USA report from PriceWaterhouseCoopers’
hospitality and leisure sectors practice.

The PwC report
predicted average daily room rates will increase 16.9 percent for the year,
with RevPAR up 28.1 percent—approximately 106 percent of pre-pandemic levels.

“Despite
volatility in the financial markets and heightened concerns over the
humanitarian crisis in Ukraine, we now expect U.S. hotels to surpass 2019
RevPAR levels this year, driven by strong growth in room rates stemming from
focused revenue management strategies of operators.” Said Warren Marr, PwC’s US
Hospitality & Leisure managing director.

Hotel occupancy
rates for the year are expected to rise to 63.1 percent, according to PwC. 

“As in our
last outlook, the big story remains room rates,” the report noted. “Average
daily room rates surpassed comparable 2019 levels in every month of Q3 and Q4
last year, and in February, March and April this year (January missed by
$0.28). RevPAR in March and April exceeded comparable 2019 levels, and this is
expected to continue through the forecast period.”

Rising demand from
individual business travelers and groups in 2023 is expected to offset any
softening in leisure travel, which boomed domestically during Covid-19 as
vacationers chose to stay closer to home and international travel tanked.

The optimistic
forecast comes despite the surge in Covid-19 infections related to the spread
of the omicron variant in December 2021 and January 2022. 

The report noted
that while leisure travel will drive demand for lodging in the first quarter of
2022, and will continue to do so into the summer, “individual business travel and
group business has started to emerge as we head into the warmer months.”

Growth in
transient business and group travel by the fourth quarter of 2022 could be
anticipated if Covid-19 immunity levels continue to grow in the U.S. and
tensions ease in the ongoing conflict in Ukraine, the report said. However, the
report noted that lodging’s recovery “could still be bumpy this year” if the
Russian invasion of Ukraine continues to cause geopolitical and financial volatility.

Further emergence
of new Covid-19 variants, along with the impact of rising interest rates, also
could slow lodging industry recovery.

The May 2022
report cited data from IHS Markit showing that U.S. gross national product
declined slightly in the first quarter of 2022, although it expected to finish
the year with 2.4 percent growth. The research also found that the unemployment
rate for the hotel sector increased from 4% in March to 5.2 percent in April,
higher than the unchanged overall U.S. unemployment rate of 3.6 percent.

“IHS Markit
expects the unemployment rate to average 3.6 percent this year and 4.0 percent
next year, as certain sectors, like hotels and airlines, try hard to add back
previously shed jobs,” according to PwC.