Research indicates that - following a decline after September 2001 - total business demand for US hotels increased by 4.6 percent in 2004, by 3.8 percent in 2005 and by 0.9 percent in year-to-date June 2006. In comparison, total leisure demand grew by 3.3 percent in 2004, 1.7 percent in 2005 and declined by 2.2 percent in year-to-date June 2006.

The hotel business demand per capita of the adult U.S. resident population grew by 2.6 percent in 2005 but is expected to slow to 0.8 percent in 2006^[1].  Hotel leisure demand per capita of the adult U.S. resident population grew by 0.5 percent in 2005 but is expected to decline by 0.3 percent in 2006. Comparatively, hotel business demand per capita of domestic travelers in 2005 grew by 0.3 percent, while the hotel leisure demand per capita of domestic travelers declined by 1.7 percent during the same period.

According to Bjorn Hanson, Ph.D., principal in PricewaterhouseCoopers' Hospitality & Leisure practice, "Slowing per capita demand growth indicates that the industry is entering the mature phase of this cycle. The trends also reflect that businesses and consumers are responding to the cumulative increases in hotel rates. Still, demand growth continues to exceed increases in supply."

Over the last two years factors contributing to the continued but slowing growth in the hotel business demand per capita in the U.S. include:

• Accelerated global and U.S. macro-economic performance;
• Continued improvement in corporate revenues and earnings performances, adding to business confidence;
• Heightened traveler concerns about inconvenience related to additional airport security procedures;
• Increased gasoline prices, which have increased by 75 percent since 2000;
• Increased U.S. average daily rates (ADR), which increased by 5.4 percent over the prior year.

The following graph and tables present the actual trend of business and leisure occupied room nights and per capita demand between 1999 and year-to-date June 2006.

Occupied Room Nights (in millions) - 1999 to Year-to-Date June 2006

Source: Smith Travel Research.


The research was done by PricewaterhouseCoopers and supplemented by the U.S. Census Bureau, Smith Travel Research (STR) and Travel Industry Association of America (TIA) data