Sept 26 - While challenging economic conditions have cooled demand for gaming, Fitch Ratings notes lodging demand has held up much better. Lodging demand in the U.S. has benefited from minimal hotel supply growth, while increased gaming supply has saturated many markets across the country. Lodging has also benefited from greater exposure to the corporate sector than gaming. Following 8% growth in 2011, U.S. revenue per available room (RevPAR) is up roughly 7% so far this year. RevPAR continues to be increasingly rate driven, which is more profitable for lodging companies, as the average daily rate has grown roughly 4.3% year-to-date with occupancy up 2.5%. RevPAR is a coincident-to-lagging economic indicator. Due to the maturing cycle and the broader economic deterioration in mid 2012, we expect RevPAR growth to continue to decelerate in 4Q12 and 2013. We are looking for 5.0% RevPAR growth for the balance of 2012 to result in full year growth of roughly 6.5%. Our preliminary forecast for 2013 calls for roughly 4.0% RevPAR growth in the U.S., largely driven by rate growth. Due to the attractive supply-demand picture, the operating outlook for lodging companies heading into next year remains positive absent further broad economic deterioration, given the highly cyclical nature of the industry. At this stage of the cycle with balance sheets at comfortable levels, most lodging C-Corps are now using any excess debt capacity to fund shareholder friendly and growth initiatives. We remain concerned about slowing global growth as it relates to the gaming industry. We maintain our outlook for 2% visitation growth for the Las Vegas Strip this year, but are revising our Las Vegas strip gaming revenue outlook to more than 3.5%. We expect visitation and revenue growth in 2013 will be similar to that of 2012. Atlantic City continues to struggle, and our current outlook incorporates a continued bottoming of the market, leading to a 3.0% gaming revenue decline in 2012 and flat-to-slow single-digit increase in 2013. The Midwestern/Southern regional markets have performed generally in line with our initial expectations, and we expect significant cannibalization of existing properties in that market to continue. Overseas, Macau gaming revenue growth has been hampered by the China broader economic deceleration. However, we believe the near-term VIP demand softening has been stabilizing and have tightened our 2012 growth forecast to 12%. Growth should continue to slow next year, as we are currently looking for an increase of 7%-8% in 2013. Additional information can be found in Fitch Ratings' Gaming, Lodging and Leisure (GLL) electronic newsletter including brief sector comments, recent/upcoming events, and links/summaries to rating actions and detailed reports. Links to GLL-related reports/comments from other Fitch groups including Leveraged Finance, Credit Market Research, REITs, Public Finance, and Structured Finance can be found there. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.