Press Release: PricewaterhouseCoopers
March 6, 2002
NEW YORK, NY -- Actual lodging demand decreased by 6.5 percent in the fourth quarter of 2001, according to an analysis
prepared by PricewaterhouseCoopers. Of that decrease in demand, 5.4 percentage points are directly attributable
to the economy, and only 1.1 percentage points are attributable to non-economic concerns, such as concerns about
travel safety and fear of flying related to terrorism. Therefore, the economy explains 83 percent of the decline
in lodging demand.
This contrasts to the third quarter of 2001, when actual lodging demand decreased by 6.0 percent. Of this decrease,
2.2 percentage points of the total decline were due to the economy. The residual 3.8 percentage points were due
to the aforementioned non-economic factors.
The analysis is based on PricewaterhouseCoopers' proprietary econometric model; the change in demand elasticity
to economic indicators explains the change in demand related to the economy.
``The economic effects of September were incorporated into an overall slowdown in economic activity, and it is
the economy that explains most of the decrease in demand, not fear or even the increased inconvenience of travel,''
said Bjorn Hanson, Ph.D., global industry leader, PricewaterhouseCoopers Hospitality & Leisure Practice.
``This is not to suggest that the influence of concerns about travel safety is certain to diminish in the immediate
future,'' said Dr. Hanson. ``In the past three months, lodging demand has been very sensitive to federal alerts,
air-travel-related accidents and other threats.''
PricewaterhouseCoopers is the leader in econometric modeling and providing reliable U.S. lodging industry forecasts
that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning
point in the last ten years, usually two years in advance of each market move.
In July 1991, PricewaterhouseCoopers predicted a return to profitability for the industry in 1993, and average
daily room rates surpassing inflation. In April 1996, PricewaterhouseCoopers issued an early alert that there would
be an occupancy decline in 1997. In October 1996, the firm predicted occupancies would decline in 1997. And in
September 1997, PricewaterhouseCoopers said room starts would decline in 1998.
In January 2000, PricewaterhouseCoopers forecasted a U.S. lodging industry slowdown in late 2000 and early 2001.
Recently, PricewaterhouseCoopers applied the same econometric modeling to the local level and can now offer forward-looking
Market Outlooks. These local forecasts rely on extensive lodging data collection, empirical studies and solid econometric
models to support all positions and conclusions. The Market Outlooks are patterned after the structure of the U.S.
industry econometric model.
PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human
resources and financial consulting in North America, Europe, the Middle East, Africa and Asia Pacific. The group
has a partnership with Smith Travel Research.
PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional
services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help
our clients solve complex business problems and measurably enhance their ability to build value, manage risk and
improve performance in an Internet-enabled world.
PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.
SOURCE: PricewaterhouseCoopers