"The American economy and citizens will surprise the world with our resilience…The lodging industry may resist further declines inin 2002," read a research briefing from PricewaterhouseCoopers, released September 12, 2001. Seven months later, the statement seems more prescient than optimistic: Despite a challenging first-quarter for the U.S. lodging industry, Mark Lomanno, president of Smith Travel Research, says, "We believe the stage is set for improved industry performance for the balance of 2002 and into 2003."
The bad news is that occupancy was down the first quarter of 2002 by 5.6 percent over first-quarter 2001; average room rate fell 5.1 percent; and revenue per available room, or revPAR, went down 10.5 percent the first three months of this year. "The U.S. lodging industry endured a challenging operating environment in the first quarter," says Lomanno.
The good news is that the overall economy is making an unexpectedly strong comeback, which led PwC to forecast in April that lodging demand will increase 3.8 percent in 2002 over last year. Increasing demand, coupled with the slowest growth in supply in eight years, means occupancy also will increase to the tune of 1.2 percent, bringing it to 61.3 percent this year. PwC also forecasts that revenue per available room, or revPAR, will bounce up 3 percent over last year. Average daily room rate recovery is lagging behind other indicators, however, which means revPAR won’t bounce all the way up to 2000 levels until next year, according to PwC.