U.S. hotels' recovery slower than expected

Business has been down from the market decline, terrorist attacks Sept. 11

August 27, 2002|By BLOOMBERG NEWS

NEW YORK - U.S. hotels will recover slower than expected after last year's recession and terrorist attacks, PricewaterhouseCoopers said yesterday, cutting its forecast of 2002 hotel room demand a second time in four months.

The firm said revenue per available U.S. hotel room, a measure of average occupancy and room rate, will fall 2.3 percent, to $49.68, from $50.83 last year.

In May, the firm said revenue per room would fall 0.7 percent. Before that, it estimated room revenue would rise 3 percent from last year.

A "sharp decline" in stock market indexes in July, weakening economic growth and the inconvenience of air travel are hurting demand for the lodging industry, PricewaterhouseCoopers said.

The rate of recovery for the industry will be the slowest in the past 30 years.

"Lodging demand has taken between three and six quarters to recover from the trough and regain the previous peak in the past three industry cycles since 1973," the firm said in a report. "PricewaterhouseCoopers now expects lodging demand to take eight quarters or from the fourth quarter of 2001 to the fourth quarter of 2003" to recover.

Last year, the hotel industry suffered the worst drop in demand in 34 years because of the attacks Sept. 11 and decline in spending on business travel.

About 56 percent of corporate travel planners think it will be more than a year before business travel returns to "healthy" levels, the National Business Travel Association said this year.

Revenue per room will rise 3.5 percent next year and 5.6 percent in 2004, helped by more "robust" business travel spending, PricewaterhouseCoopers said.

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