The 2019 and 2020 outlook for the U.S. lodging industry is expected to remain stable, despite economic concerns, according to PwC's latest Hospitality Directions U.S. outlook. PwC based those findings partially on first-quarter results that came in below expectations. The industry reported its lowest first-quarter year-over-year revenue per available room growth, 1.5 percent, since 2010. March in particular was weak, as occupancy was flat year over year and RevPAR rose just 0.6 percent.
Economic factors for stasis through 2020 include an anticipated slowdown in GDP growth, from 3 percent in the fourth quarter of 2018 to 2 percent in the fourth quarter of 2019; slower growth for business investments; an expected rise in inflation from 1.7 percent in 2019 to 2 percent in 2020; growing business inventories; and an anticipated decrease in consumer spending.
In 2019, PwC expects U.S. hotel supply growth to increase 2.1 percent, slightly above the long-term rate; occupancy to remain relatively flat at 66.2 percent; and RevPAR to increase 2 percent, buoyed by continued average daily rate growth of 1.9 percent. In 2020, PwC expects lodging supply and demand growth to moderate, resulting in a slight decrease in occupancy to 66.1 percent, although this level is still near the historic peak seen in 2017 and 2018. Slightly higher inflation will push ADR up 2.1 percent to $135.12, thereby boosting RevPAR 1.8 percent.
The upper-upscale and economy segments will fare the best in 2019, as annual RevPAR will increase 2.4 percent and 2.1 percent, respectively. In 2020, RevPAR will grow 3 percent year over year for both luxury and upper-upscale, while the economy segment will be the only one to see occupancy rise instead of fall.