PwC Projects Rising Lodging Demand

As the national economy strengthens, demand for lodging next year will expand by 4 percent, according to projections released yesterday by consultants PricewaterhouseCoopers. A rebound in business travel is expected to be a primary driver, and demand is expected to expand another 2.8 percent in 2005.

While recent PwC projections suggested that such a turnaround was underway, yesterday's announcement was the most definitive to date. "The strong recovery staged by the lodging industry in the late summer builds momentum for robust lodging demand recovery in 2004," said Bjorn Hanson, global industry leader of the firm's hospitality and leisure practice. Question remains whether the prospect of a 2004 rebound, which likely won't be felt until midyear, will have a meaningful effect on travel buyers' rate negotiations with hotels that get underway in the next month.

Hanson cited the recovery of the equities market and corporate profits as the most positive signs that any nascent turnaround will endure. Regarding revenue per available room, he also sounded more optimistic than in recent announcements, noting that "in the next two years, the industry would regain more than one-third of the 14.4 percent RevPAR loss experienced between 2001 and 2003."