It looks as if meeting planners are heading straight into a seller's market in 2005, according to PricewaterhouseCoopers' annual U.S. Lodging Forecast.
“The balance of power has shifted, especially during higher occupancy periods,” says Bjorn Hanson, PhD,hospitality industry managing partner, PricewaterhouseCoopers LLP, New York. This doesn't apply just to room rates, he says, but also to F&B, meeting room charges, and other costs. “2005 will seem in many ways to be more of a challenge in negotiations than 2000.”
The average daily rate rose an estimated 3.7 percent in 2004 to $86.03, compared to flat or negative growth for ADR in the three previous years. Looking ahead, similar ADR increases are anticipated for 2005 (3.5 percent) and 2006 (3.4 percent).
The forecast also predicts increased occupancy. Occupancy rates climbed to an estimated 60.6 percent in 2004 and are projected to rise to 61.5 percent in 2005 and 62.1 percent in 2006. The increase is attributed to a combination of favorable economic growth and moderate (1.3 percent) expansion in hotel room supply.
Luxury properties are the biggest benefactors of the economic recovery: Occupancy rose 2.8 percent in 2004.
Revenue per available room is anticipated to increase 6.3 percent in 2004, the largest one-year hike since 1984. Hoteliers have experienced negative or flatnumbers the past three years. The outlook remains positive as PWC projects a RevPAR jump of 5 percent in 2005 and 4.5 percent in 2006.