Rising average daily hotel room rates are expected to lift 2022 RevPAR above 2019 levels, according to the May 2022 Hospitality Directions USA report from PriceWaterhouseCoopers hospitality and leisure industry practice.

The PwC report predicts that average daily room rates will rise 16.9% for the year, with RevPAR up 28.1%, or about 106% from pre-pandemic levels.

“Despite financial market volatility and heightened concerns over the humanitarian crisis in Ukraine, we now expect U.S. hotels to exceed 2019 RevPAR levels this year, driven by strong growth in room rates resulting from targeted operator revenue management strategies”. said Warren Marr, managing director of PwC’s U.S. hospitality and leisure industry.

Hotel occupancy rates for the year are expected to reach 63.1%, according to PwC.

“As in our last outlook, the big story remains room rates,” the report notes. RevPAR in March and April exceeded comparable 2019 levels, and this is expected to continue throughout the forecast period.

Growing demand from individual business travelers and groups in 2023 should offset any slowdown in leisure travel, which has exploded domestically during Covid-19 as holidaymakers opted to stay closer to home and international travel having fallen.

The optimistic forecast comes despite the upsurge in Covid-19 infections linked to the spread of the omicron variant in December 2021 and January 2022.

The report notes that while leisure travel will drive accommodation demand in the first quarter of 2022 and continue to do so through the summer, “individual business travel and group business have begun to emerge as we we’re heading into the warmer months.”

Growth in transient business and group travel by the fourth quarter of 2022 could be anticipated if Covid-19 immunity levels continue to rise in the United States and tensions ease in the conflict in course in Ukraine, according to the report. However, the report notes that the hosting recovery “could still be bumpy this year” if the Russian invasion of Ukraine continues to cause geopolitical and financial volatility.

The emergence of new variants of Covid-19, as well as the impact of rising interest rates, could also slow the recovery of the accommodation industry.

The May 2022 report cited data from IHS Markit showing that US gross national product fell slightly in the first quarter of 2022, although it expected to end the year with 2.4% growth. The research also found that the unemployment rate in the hospitality sector rose from 4% in March to 5.2% in April, higher than the unchanged overall unemployment rate of 3.6% in the United States.

“IHS Markit expects the unemployment rate to average 3.6% this year and 4.0% next year as some sectors, such as hotels and airlines, strive to add jobs. previously cut jobs,” according to PwC.