The strong hotel seller’s market continues, but new rooms are under construction at a record pace. So says PricewaterhouseCoopers LLP in two studies released this week.
The lodging analysts are expecting a record number of occupied rooms this summer for the U.S travel industry. The occupancy rate will not beat the 72.1 percent achieved in 2000, but given the 7.7 percent increase in hotel rooms since then, the summer’s predicted occupancy of 71.5 percent will mean a new per-night record of 3.277 million occupied rooms.
With demand high, hotel construction is bustling. PWC is forecasting the highest level of new hotel room construction since 2000: 119,000 new hotel rooms in 2006, an increase of 45 percent over 2005. The largest percentage increase will be in upscale hotels and midprice hotels without food and beverage.
For meeting professionals and other hotel buyers hoping to see a break in the seller’s market, the increase in hotel construction is not a panacea. "Even with this large increase, supply will continue to increase at less than demand for 2006 and 2007," said Bjorn Hanson, PhD, principal, PricewaterhouseCoopers Hospitality and Leisure practice, in a press release.