The Bright Future of the Hotel Industry

Like so many industries, the hotel management industry has suffered in the wake of the United States recession back in 2008. With unemployment hovering near 9 percent, many people have been struggling to pay for the necessities of life, let alone luxuries like a family vacation. Even for those employed, wage growth has been stagnant, leading to considerable consternation about future job prospects.

In addition, families have been hit by higher prices for a variety of goods. For instance, the average price of gasoline is currently $3.85 a gallon, up more than a dollar from just a year ago. Not only has this affected automobile travel, but it has also increased the price of air travel. In short, the cost of all types of transportation is higher, making families more reluctant to travel great distances for a summer vacation.

However, recent events can finally give a hotel operator hope for the future. After years of struggling to maintain any semblance of profitability, the macroeconomic picture of the hotel management industry is looking bright again. A confluence of positive economic news is leading to projected higher profits for practically every hotel operator and hospitality management company in the country.

PricewaterhouseCoopers recently released its positive updated outlook for the hospitality industry. In their report, they indicate that increasing hotel demand and a lack of supply growth will significantly increase the average daily rate for a hotel room for the next several years. Ultimately, this will lead to a 7.6 percent increase in revenue per available room in 2011, followed by a further 7 percent increase in 2012.

PricewaterhouseCoopers updated its forecast on hotel demand after Macroeconomic Advisers, an economic analysis firm, increased its gross domestic product growth estimates for 2011. After determining that the weak economic performance of the United States in the first quarter of 2011 was due to temporary factors that were unlikely to repeat themselves, Macroeconomic Advisers stated that U.S. GDP growth would likely increase from 2.8 percent in 2010 to 3.2 percent in 2011.

When coupled with the lack of new hotel construction, which is currently at its lowest level in 20 years, the implication is clear: an increase of 3.7 percent in the average daily rate of a hotel room in 2011 and an even larger 5.5 percent increase in 2012. Given these welcome facts, the hotel management industry can look forward to a promising future!