PwC Sees Hotel Room Rates Drop Next Year

The outlook for the U.S. hotel industry continues to dim, as PricewaterhouseCoopers' hospitality and leisure practice is forecasting two consecutive years of declining revenue per available room and a reduction in rates next year.

"The deteriorating outlook for the economy is impacting travel habits and spending, and hotels are expected to experience reduced occupancy levels, and to a lesser degree, some room rate erosion through 2009," PwC principal and leader of the hospitality and leisure practice Scott Berman said in a statement.

The revised forecast, issued late Friday, indicates a 0.8 percent drop in RevPAR this year, followed by a 5.8 percent decline in 2009, the sharpest since 2001. This would be the first two-year consecutive decline in RevPAR since 2001 and 2002.

Average daily rate growth in 2008 will be 3 percent, less than half the rate growth levels seen in 2007, according to PwC. This will be followed by a 2.4 percent decline in average daily rates in 2009, the forecast indicated.

Occupancy will continue to decline through 2009, reaching an almost 40-year low of 58.6 percent in 2009, PwC reported.