After disappointing third-quarter results, the U.S. hospitality industry is in for more of the same for the final quarter of 2019 and for 2020, with a projected year-over-year decline in occupancy, and only slight increases in average daily rate and revenue per available room, according to PwC.
Despite an expected boost in demand from the upcoming presidential election, the company anticipates supply to slightly outstrip demand for the remainder of this year and next, leading to year-over-year declines in occupancy of 0.2 percent in 2019 to 66 percent, and 0.1 percent in 2020 to 65.9 percent. Driven by slight increases in ADR, full-year 2019 RevPAR is expected to grow 0.7 percent to $86.57, and 0.5 percent in 2020 to $87.03, both below inflation growth rates of 1.5 percent and 2 percent, respectively. ADR is projected to increase 0.9 percent in 2019 to $131.09, and 0.7 percent in 2020 to $131.98.
While RevPAR increased 0.7 percent during the third quarter, it was the lowest year-over-year quarterly growth since the beginning of the U.S. lodging industry's recovery from the Great Recession. And though gross domestic product is projected to grow through 2020, it will decelerate to 2.1 percent year-over-year fourth-quarter growth in 2019 and remain at that level through 2020, according to IHS-Markit economists. This deceleration is driven by factors including slowing global growth, the United Auto Workers strike against GM, declining net exports, the effects of recent tariffs and reduced business investment.
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