Forecasts show that RevPAR will increase 5.9 percent in 2007, a slowdown from near 8.0 percent growth in 2006. The 2007 forecast is for slightly more demand growth, a large increase in supply and less rate growth than 2006.
The RevPAR growth slowdown is primarily driven by a decline in average daily rate (ADR) growth from 6.8 percent in 2006 to 5.9 percent in 2007. Accelerating supply growth with only a slight increase in the growth of demand will result in only a one-tenth of an occupancy point increase in 2007.
"2007 will be another positive year, but will represent a change from the extraordinary RevPAR increases in 2004, 2005 and 2006," says Bjorn Hanson, a principal with PricewaterhouseCoopers. The 2004, 2005 and 2006 increases were the largest in over 20 years.
In 2006, PricewaterhouseCoopers estimates that 85 percent of RevPAR growth is from increases in ADR; the forecast for 2007 reflects that ADR will represent 99 percent of RevPAR growth.
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