Hotels Likely to See First Occupancy Decline in Nearly a Decade

The focus is turning to the policies of the new administration, Berman says.

NEW YORK CITY—Looking ahead to 2017 in a new report, PwC US is forecasting the hotel industry’s first year of declining occupancy in a staggering eight years. A predicted acceleration of supply growth—reaching the long-term average of 1.9%—combined with a continued deceleration in demand growth, will prompt the drop in hotel stays. In addition, the firm says, ADR growth is expected to slow driving a below-inflationary RevPAR increase of 1.7%, the smallest increase since the end of the recession.

PwC’s outlook, which is based on an economic forecast from Oxford Economics, notes that after a tepid first half, real GDP in the third quarter increased 2.9 percent, driven by a combination of modest increases in consumer spending and stronger-than-expected exports. Uncertainty, both international and domestic, continues to weigh on US lodging industry performance.