Hotel rates likely to be in guests' favor now

Some surveys indicate a decline

March 18, 2002|By KNIGHT RIDDER/TRIBUNE

This is a good year to be a hotel customer - and a bad one to be on the other side of the front desk.

Consultants who follow the hotel business say that patterns that developed last fall, when the industry was reeling from the Sept. 11 attacks, and a yearlong decline in business travel are likely to continue through this year.

Weak demand for hotel rooms, especially in big cities, is the part of the equation that is good for travelers.

With occupancy rates low, the average daily rate for a U.S. hotel room is not likely to increase over the 2001 average and may decline by about 7.5 percent, depending on which consultants are making the projections.

PricewaterhouseCoopers estimated that the daily room rate declined 1.5 percent last year, the first annual average decline since 1940. Average rates will grow by less than 1 percent this year, the firm said.

Occupancy last year was slightly more than 60 percent and is likely to be just under 60 percent this year, before recovering to about 61 percent next year, the consultants said.

The Hospitality Research Group, a unit of PKF Consulting that tracks the 50 largest U.S. metropolitan areas, estimated last month that occupancy will be about 60.5 percent this year but will rise to almost 67 percent next year.

Hospitality Research Group reckons room rates will continue to drop this year, to $91.13 a day, a decline of about 7.5 percent compared with last year.

The average daily rate in 2001 was $98.53.

"Through 2003, hotel managers are going to be reluctant to push rates up," said Robert Mandelbaum, managing director of the research group in Atlanta.

"From a consumer's standpoint, that's good."

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