PwC Sees Hotel Revenue Soaring

Revenue per available room in the United States, a key indicator closely watched because it reflects hotel profitability, this year is expected to increase 6.3 percent over last year, the largest increase in 20 years. The forecast, released today by PricewaterhouseCoopers, significantly revises the consulting firm's earlier prediction that RevPAR would rise 5.2 percent. PwC's growing optimism on the state of the lodging industry is further evidence that hoteliers are feeling increasingly confident going into negotiations with travel managers for 2005 rates and that they are likely to seek substantial rate hikes.

PwC upped its forecast for 2004 average daily rate as well, to 3.7 percent. Bjorn Hanson, global head of PwC's hospitality and leisure practice, attributed the higher forecast to an "acceleration of business travel and the consequent increase in higher-rate lodging demand."

In addition, hotel companies are exerting more control over rate integrity and inventory. "The increase in control has been dramatic. As a result, we're seeing less discounting on the third-party Internet distribution channels," he said. There also has been further consolidation in hotel ownership, which means more properties have consistent pricing policies.