Bad news, good news
American Rental Association (ARA) rental revenue forecast calls for modest growth in 2021, then accelerating in 2022 and beyond.
The American Rental Association (ARA) in its November 2020 Rental Pulse edition, is forecasting a 13 percent decline in equipment and event rental revenue in 2020 compared to 2019, dropping to $48.7 billion in the United States.
However, the latest forecast released by the association on Nov. 12 , calls for modest overall growth in 2021, ticking up 0.3 percent to $48.9 billion, before accelerating recovery kicks in with growth of 9.2 percent in 2022, 6.8 percent in 2023 and 4.8 percent in 2024 to reach $59.7 billion.
Party and event take biggest hit
The party and event segment is forecast to show the largest drop in 2020 revenue, down 38.9 percent to $2.2 billion. After so many rental stores saw business virtually disappear in the spring and early summer of 2020, the results set the stage for what will look like very favorable comparisons in 2021.
For example, the ARA forecast calls for party and event rental revenue to grow by 36.4 percent in 2021 to reach $3 billion, but this recovery falls far short of making up for the 2020 decline. The segment, according to the forecast, is not expected to reach peak 2019 revenue levels again until 2024.
Construction and industrial rental revenue also is forecast to finish 2020 with a significant hit in revenue, dropping 13.3 percent to $33.8 billion and a 3.3 percent decline is forecast for 2021 before double-digit growth of 11.2 percent comes in 2022.
The general tool segment weathered the coronavirus (COVID-19) pandemic the best and is expected to finish 2020 down 5.2 percent to $12.7 billion and is expected to top its 2019 revenue peak by 2022.
“The forecast shows us how hard the coronavirus pandemic hit the equipment and event rental industry. Hopefully, 2021 will see us getting back some of the revenue losses we experienced in the equipment and general tool segments. However, the event segment continues to have a steep hill to climb and we will be working hard to bring more relief to that segment through government stimulus programs,” says John McClelland, ARA vice president for government affairs and chief economist.
Investment in equipment is significantly down in 2020, with a 43 percent decrease to $8.166 billion. Equipment spending is forecast to rebound by 17.4 percent in 2021 and by 46.3 percent in 2022 to surpass annual investment of $14 billion.
This latest forecast comes from the ARA Rentalytics subscription service available to ARA members using data and analysis provided by IHS Markit, one of the world’s leading economic forecasting firms. The forecast is updated quarterly. For more information and to subscribe to ARA Rentalytics, visit ARArental.org/ARA-Rentalytics.
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