The latest Hospitality Directions U.S. report from PwC reconfirmed what previous PwC reports and the downgrades among hotel companies' quarterly earnings guidance have shown: The hospitality industry is cooling off. Year-over-year results for the second quarter came in "significantly below expectations," according to PwC. Average daily rate for U.S. hotels rose 1.2 percent, and occupancy inched down 0.1 percentage points, resulting in a tepid revenue per available room increase of 1.1 percent. The recent weak performance coupled with slowing economic trends suggests a continued deceleration in topline performance at least through 2020.
Since the beginning of the economic recovery that followed the Great Recession a decade ago, RevPAR across the U.S. grew at a compound annual rate of 5.4 percent. In 2018, it grew just 2.9 percent. It's anticipated to grow 1.1 percent in 2019 and 1 percent in 2020; ADR will increase by the same percentages, and occupancy will remain flat.
Economy and independent hotels fare the best in 2019. PwC expects RevPAR for the economy category to increase 1.9 percent and for independent hotels to increase 1.8 percent. The upscale segment is the only one for which RevPAR is anticipated to decline in 2019, by 0.4 percent. For 2020, RevPAR will increase only for luxury brands and independent hotels, each by 1 percent or slightly greater.
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