The new year is around the corner, and it looks like 2015 will bring plenty of good news for the hotel industry. A new report from PwC shows that hoteliers will be enjoying some serious upticks in revenue potential. In fact, ADR growth is slated to reach its highest year-over-year increase since 2007. What’s responsible for that impressive surge? The meetings industry.
“Group demand improved significantly in the third quarter, leading to stronger-than-expected occupancy levels,” Scott D. Berman, principal and U.S. industry leader, hospitality and leisure, PwC, said. “Despite an evolving supply pipeline, industry demand trends are expected to remain robust, giving confidence to the operating community to drive room rates higher in 2015.”
The report echoes many of the findings from the American Express Meetings & Events 2015 Global Meetings Forecast, which estimates that group hotel prices in North America will rise by 4.6 percent — the highest increase anywhere in the world.
Here’s a look at how that increase will impact hoteliers, planners and attendees.
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1) Hoteliers will be partying like it’s 1984.
Just how happy will hotel owners and managers be? Well, occupancy levels aren’t just creeping up by a few tenths of a percentage point. They’re expected to reach 64.9 percent. If that happens, it will be the highest industry-wide occupancy rate in the past 30 years.
However, hoteliers won’t be all smiles. As lodging alternatives work to attract business travelers, the hotel industry will need to fend off increasing outside competition.
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2) Attendees will be looking for ways to save.
As hoteliers take advantage of the opportunity to charge higher room rates, room blocks at upscale hotels may be more challenging to fill as meeting attendees and business travelers begin to compare costs at limited-service properties. PwC predicts that occupancy levels in the lower-priced chain scale segment will approach or exceed prior peak levels.
Planners will want to keep this in mind when determining their official hotel roster and craft their marketing plans. As attendees focus on finding affordable accommodations, here are three tips for filling a room block.
3) Planners will be exploring some new properties.
Planners can expect to receive invitations to tour some new hotels soon. From the new Loews in Chicago to a JW Marriott in Austin and more, some of the top meetings destinations in the US will be welcoming some new hotel addresses.
While new hotel construction had been somewhat stagnant in the post-recession economy, investment in new properties is returning. PwC’s report estimates an accelerating supply growth of 1.4 percent in 2015. The pace is already quickening in 2014, too. Construction of new hotels is up by approximately 40 percent in the third quarter.
It’s clear that hoteliers will have more leverage to increase room rates next year, but meeting planners still hold plenty of power at the bargaining table. Check out “4 Tips For Effective Hotel Contract Negotiations.”