As leisure demand wanes and hoteliers find room rate increases harder to implement than in recent years, PwC on Wednesday tempered its projection for 2024 U.S. average daily rate and revenue per available room, while noting significant hikes aren't likely in 2025 either. Business travel continues to improve, however, according to the company.
PwC in its May 2024 Hospitality Directions US report projected 2024 U.S. ADR would increase 1.2 percent year over year to $157.70 while RevPAR increases 2.2 percent to $100.23. In November, PwC's most recent projection, the company forecast 2024 ADR growth of 2.4 percent and a RevPAR increase of 2.7 percent.
"A 50 [basis point] increase in the unemployment rate over the past 12 months … now speculative reductions in policy rates, and a perceived lack of visibility in the public markets have resulted in downward pressure on room rates," PwC wrote in its report.
PwC now projects average 2024 U.S. occupancy of 63.6 percent, up from 62.9 percent in 2023 and higher than the 63.2 percent the company forecast in November. "Occupancy levels have declined year-over-year in each of the past four quarters but are expected to gradually improve through the balance of this year and at least the first half of 2025," according to PwC. Hotel analytics firm STR this week noted that U.S. occupancy in April increased year over year, the first such monthly increase in at least a year.
As for business travel, "Individual business travel and group demand have continued to improve but have still not been able to offset the softening of leisure demand," according to PwC. Looking ahead, "for the remainder of 2024 and into 2025, the outlook for markets reliant on individual business travel remains uneven with substantial deviation in office attendance across different metropolitan areas."
PwC projected full-year 2025 U.S. occupancy to increase 0.7 percent, while the average daily rate holds steady and RevPAR increases 0.7 percent.
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