Tourism sags in Md., U.S.

Many cancellations have been received for well into next month

September 18, 2001|By Lorraine Mirabella | By Lorraine Mirabella,SUN STAFF

Fear of terrorist attacks, flight cutbacks and a sagging economy are prompting travelers to cancel or delay vacations and trips, dampening tourism in Maryland and around the nation.

Cancellations of tours and hotel reservations reach well into next month in the wake of last week's attacks that destroyed the World Trade Center, damaged the Pentagon and killed thousands.

It could be some time before tourism returns to more typical levels, with the timing of a rebound depending on consumer confidence, the economy and the airlines' ability to return to more regular flight schedules, analysts said yesterday.

"The tourism industry obviously is going to be one of the industries that's most affected by the events of last week," said Warren Marr, director of hospitality and leisure consulting for PriceWaterhouseCoopers in Philadelphia. His company revised its lodging industry forecasts and is expecting a 3.5 percent to 5 percent decline this year in revenue per room, which would be "the worst performance in 33 years for which data is available."

Shares of hotel chains, gaming companies and cruise lines were hit hard yesterday as Wall Street resumed trading. Shares of major chains such as Starwood Hotels & Resorts Worldwide Inc., Hilton Hotels Corp. and Host Marriott Corp. plunged, nearly 40 percent in Starwood's case. Shares of Park Place Entertainment, the nation's biggest casino owner fell, and Carnival Corp.'s shares plummeted 46 percent.

"It's the fear that's driving these prices right now," said Rod Petrik, a managing director at Legg Mason Wood Walker Inc. in Baltimore who follows the lodging industry.

"The lodging industry has been searching for a cyclical bottom, and last week's events will accelerate that process," Petrik said "The bottom is going to be a lot lower than any industry observers expected."

Hotel occupancies had dropped by 5 percent to 6 percent before the disaster because of cutbacks in corporate travel, a slowing economy and lower attendance at conventions, Petrik said.

Those trends are likely to continue and include leisure travel to some extent, he said, especially to destinations such as Europe. If even partial travel to New York declines, that could hurt earnings of major hotel chains, because New York hotels account for 5 percent of U.S. hotel revenue, he said.

"Today's drop [in the stock market] is just the uncertainty," Petrik said.

"We know that people are going to cut back on travel in the foreseeable future, but we don't know how long and extended a period of time that will be."

Some would-be travelers feel jittery, whether about getting on a plane or about being too far from home.

Sarah Nacht, 29, an account supervisor for an advertising agency in lower Manhattan, decided yesterday to cancel a three-day vacation she and a friend had planned for the end of the month in Las Vegas, even though the Internet site that booked the package charged a $150 cancellation fee.

"My friend and I felt uneasy about going," she said.

"We're all depressed and didn't think we'd want to be partying it up in Vegas. And we weren't sure how safe it would be, flying and just being away from home. The idea of being home is comforting."

Resort destinations such as Las Vegas are bracing for declines in visitors.

Yesterday, Park Place Entertainment, the world's largest casino company, said it would postpone construction of a new $425 million hotel tower at Caesars Palace, "given the anticipated impact of last week's tragic events in New York and Washington on the entire travel and resort industry, coupled with demand already softened by a slowing economy," said Thomas E. Gallagher, Park Place's president and chief executive officer.

In Baltimore since the attacks, several hotels have had large numbers of cancellations, said Carroll R. Armstrong, president and chief executive officer of Baltimore Area Convention and Visitors Bureau.

At one downtown hotel, half of the expected guests checked in. Another hotel that initially had been oversold ended up with 20 percent occupancy, said Armstrong, who declined to identify the hotels.

"Unfortunately, a lot of corporate America is canceling their meetings and canceling reservations," and occupancy is projected to be soft another week or so, said Chris Macary, general manager of the Hilton Hotel Columbia.

Fifteen to 20 groups canceled bus charters they had booked for outings with Eyre Bus and Travel, based in Glenelg.

And several day-trip bus tours from the Baltimore-Washington area to New York have been canceled, said Ronald L. Eyre, the company's president. Bookings remain for 3,000 passengers on day bus trips to New York's Radio City Music Hall in November and December.

Eyre said bus companies could benefit as people elect not to fly.

Even so, tourism in Maryland is heavily dependent on air travel, said Mary Jo McCulloch, president of the Maryland Hotel and Lodging Association and of the Maryland Tourism Council.

"If we see businesses cutting back, if we see consumer confidence shaken, if we see it more difficult to get airline travel, we will certainly see a dramatic decrease in our business," she said.

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