Rate and revenue per available room will have grown by leaps and bounds by 2020—but not occupancy.
Occupancy levels should taper by 2020 thanks to pressure from occupancy ceilings and supply increases. Supply is expected to be just shy of 2
billion available roomnights, with demand nearing 1.3 billion roomnights. As a result, occupancy is estimated to be just less than 64%, close to its 2014 level.
Our 2020 forecast anticipates average rate topping $150, a total increase of approximately 30% from its 2014 level. Revenue per available room is projected to surpass $96, a path fueled mainly by rate growth.
Overall, we expect a compounded annual rate growth for RevPAR during this expansion period to be similar to what we saw in the 1990s. In the 98-month expansion ending in late-2001, RevPAR grew at an annual compounded rate of 4.8%. We have forecast an annual compounded growth rate of 4.9% for RevPAR for the 93 months beginning April 2013 through the end of 2020.
This forecast assumes no major downturn brought about by a major unforeseen event or disaster, be it economic, political, natural, or otherwise.
