Average daily hotel rates and revenue per available room in the US will continue to rise in 2023, but at a slower and more controlled pace, according to PwC’s recent US Hospitality Trends report.
“US hotels will finish RevPAR at record highs this year, but economic headwinds are expected to continue to strengthen in 2023, threatening the pace of the recovery,” US hospitality and leisure managing director Warren Marr said in the report.
The company revised its forecast for 2023 in light of economic headwinds such as persistent inflation and a PwC-predicted decline in leisure travel. The company now projects a hotel occupancy rate of 63.6 percent in 2023, slightly lower than PwC’s previous forecast. in may
According to PwC, ADR is projected to increase 4.5 percent year-over-year to $155.81 and RevPAR to increase 5.8 percent to $99.12 in 2023 – nearly 115 percent above pre-pandemic levels. Although still steep, both ADR and RevPAR growth will be lower than the sharp increases in 2022.
However, PwC still expects demand from individual business travelers and groups to increase in 2023.
“In 2023, we expect growth in demand from individual business travelers and groups to continue to offset softening demand for leisure, with outbound international leisure travel outpacing inflows given the relative strength of the dollar,” PwC said.
Travel demand has risen sharply this summer after the easing of domestic travel restrictions and increased demand, but travelers are facing a changing economic environment and “the potential emergence of stronger variants of the virus in the winter months, and the ongoing conflict in Ukraine,” the report said.
As for growth in development and expansion, “the Fed’s monetary policy has resulted in significantly higher interest rates than previously expected over the period covered, resulting in a sharp slowdown in the estimated start of new hotel construction next year,” according to PwC.
For the rest of the year, full-year U.S. ADR is forecast to grow 19.3 percent year-over-year in 2022, pushing RevPAR to a record high by the end of 2022 — up from 2019 levels by about 108 percent. according to the report.