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The Honolulu Advertiser
Posted on: Friday, December 14, 2001

Hotel rebound expected in '03

By Jeannine DeFoe
Bloomberg News Service

Demand for U.S. hotel rooms won't rise until 2003, as the Sept. 11 attacks and the slowed economy keep travel down through 2002, according to a nationwide consulting firm forecast released yesterday.

Although last week was pretty good for local hotels hurting since Sept. 11, there was still plenty of room for tourists on the beaches of Waikiki. Travel is expected to be down next year as well.

Deborah Booker • The Honolulu Advertiser

In the wake of the attacks, occupancies at hotels around the world have plunged. PricewaterhouseCoopers' Hospitality & Leisure Group said hotel occupancy rates are expected to average 59.6 percent next year, slowly rising to 60.8 in 2003.

Occupancy rates have been lower than that in just seven of the last 75 years.

The weak demand may put some hotels in trouble, said Bjorn Hanson, head of PricewaterhouseCooper's hospitality practice.

Between 8 percent and 15 percent of hotels in the U.S. aren't making enough revenue to cover interest payments, the firm said.

The hospitality group's forecast estimates that hotel revenue per available room, a measure of average room rate and occupancy, will fall this year and next — 6.7 percent in 2001 and 0.2 percent in 2002 — before rising 5.1 percent in 2003.

Revenue per room will hit a low of $27 this quarter and rise to $29 by the end of 2003.

"Every period of slow supply growth has been followed by good" revenue growth, said Hanson.

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