For the first time since the coronavirus (COVID-19) pandemic adversely impacted the equipment and event rental industry last year, the latest 2021 ARA forecast calls for more positive growth in 2021 for the rental industry.
The previous forecast, released on Nov. 12, projected a modest uptick of 0.3 percent in equipment and event rental revenue in 2021, but the new forecast, released Feb. 16, shows an expectation of more than 1.5 percent growth in 2021 to surpass $50.2 billion.
This comes after a difficult 2020, where total industry revenues dipped 11.7 percent to just under $49.5 billion, with party and event showing a decline of 49 percent.
Construction, which showed an 11 percent decline in 2020, has an expectation to show a 1 percent drop in 2021. General tool rental revenue, however, is expected to grow 4 percent and party and event starts to recover from the devastation of 2020 to grow 37 percent in 2021.
Overall, the 2021 ARA forecast calls for accelerated recovery in 2022 with revenues growing 11.3 percent to $55.9 billion, then nearly 5 percent to $58.7 billion in 2023 and another 3.1 percent to $60.5 billion in 2024.
All three segments have the expectation to surpass peak revenues of 2019 by the end of 2022.
“With the government stimulus programs and the rollout of the vaccine, people are beginning to have more confidence. The equipment and event rental industry often recovers from adversity more quickly than the industries it serves. It looks like this is happening again,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
“Even the party and event companies that were hit so hard by cancellations starting last March are beginning to see a glimmer of hope ahead. This comes while ARA continues to work hard to bring more relief to that segment through additional government stimulus programs,” McClelland says.
Why this forecast
Scott Hazelton, managing director, IHS Markit, the international forecasting firm that compiles data and analysis of the ARA Rentalytics members-only subscriber service. This is part of a research partnership with ARA. Hazelton says the new forecast is more positive because economic data from the end of 2020 was better than expected.
“From an equipment rental perspective, construction did not slow as much as expected. Although we do expect it to remain a drag in 2021. The larger surprise was the performance on manufacturing, which is also a source for equipment rental demand,” Hazelton says.
“Meanwhile, we did see a resurgence of COVID-19 in January. But we also had the release of significant quantities of vaccine. Actual vaccination implementation has had some bumps in the road. However, the fact that it is rolling out is a source of consumer and business confidence. There also are improved prospects for economic stimulus with the election of President Biden and Democrat control of the Congress,” Hazelton says.
The forecast reflects the passage of the latest COVID-19 economic relief bill passed in December. However, Hazelton says it does not incorporate the $1.9 trillion American Rescue Plan being proposed by the Biden administration.
“The potential is for 2021 to surprise on the upside,” he says.
For Canada, the ARA forecast shows an expected 7.3 percent increase in equipment and event rental revenue in 2021. This will take it to $5.2 billion with steady growth in the succeeding years of the forecast. It includes a 7.2 percent growth in 2022 and a 6.5 percent in 2023. It also forecasts a 3.5 percent increase in 2024 to nearly $6.2 billion.
This comes after a 12.2 percent drop in revenue in 2020. It includes a 12 percent decline in construction rental revenue and a 9 percent drop in general tool revenue. It also includes a decline of 35 percent in party and event.
This is the same as in the U.S. There is an expectation that parties and events will begin to recover in 2021. The forecast is a 29 percent growth. All the segments have the expectation of exceeding peak revenues achieved in 2019 by the end of 2023.
About American Rental Association
The American Rental Association, Moline, Ill., is an international trade association for owners of equipment and event rental businesses. They also support the manufacturers and suppliers of construction/industrial, general tool and party/event rental equipment. ARA members, which include more than 11,000 rental businesses and more than 1,000 manufacturers and suppliers, are located in every U.S. state, every Canadian province and more than 30 countries worldwide also. Founded in 1955, ARA is the source for information, advocacy, education, networking and marketplace opportunities for both the equipment and event rental industry throughout the world.