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Hotel room rates may be hiked 'aggressively,' forecaster says

Flower on towels in hotel room
Stock | 360 | Getty Images

Hotel owners across the U.S. are expected to be told later Monday they should be able to "aggressively" raise room prices this year, with one consultancy already forecasting the national average room rate to rise 5.4 percent.

One of the lodging industry's most prominent forecasters is expected to share room price details at the Americas Lodging Investment Summit conference in Los Angeles. The market can absorb "significant" hikes because strong fundamentals already have been pushing occupancy rates to fresh records in 2015.

The projected 5.4 percent rise comes from Mark Woodworth at PKF Hospitality Research.

Some cities will climb more than that. Room prices in San Francisco, Oakland, California, and Santa Cruz, California, will rise by up to 10 percent, Woodworth said. Denver is forecast to have a 9.1 percent average room rate increase, and Nashville, Tennessee, could see 8.6 percent.

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Looking ahead, travelers reacting negatively to higher room rates eventually will slow demand growth for the industry during the next 12 months, Woodworth said.

However, room price hikes should help boost profits for U.S. hotel owners 13.2 percent to a record high, with another double-digit increase in hotel owners' profits predicted for 2016, he said.