PwC Hospitality Directions: January 2016
Performance of the US lodging sector during the fourth quarter was lackluster, with hotels struggling to meaningfully increase average daily rates, even as occupancy levels continued to increase, albeit at a slower pace. The overarching question related to the lack of average daily rate growth, despite peak occupancy levels, raise concerns among industry participants. Recent trends continue to point to hotels' lack of ability to meaningfully increase rates, with Luxury hotels trailing other chain scale segments in pricing power in the fourth quarter. While overall demand conditions in the US remain favorable, contributing to still increasing occupancy levels, the subdued increases in average daily rates appear to be impacted, in part, by the continued strength of the US Dollar, especially in select gateway markets, as well as the distribution channels that are increasingly driving this growth in occupancy.
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