U.S. hotels pulling out of slowdown

By Jeannine DeFoe
Bloomberg News Service

NEW YORK — U.S. hotel room demand fell at the second slowest pace since Sept. 11 at the end of January, a sign that the hospitality industry is shaking off the effects of the terrorist attacks, Smith Travel Research said.

Revenue per hotel room, a measure of occupancy and room rate, fell 6.9 percent to $45.45 in the week ending Feb. 2, the Hendersonville, Tenn.-based firm said.

Starwood Hotels and Resorts Worldwide Inc. and Hilton Hotels Corp. have said they expect room revenue to improve from 2001 levels later this year.

The latest figure shows room revenue, which started dropping in the second quarter as the economy fell into a recession and companies cut travel spending, was about what it would have been if the terrorist attacks hadn't fueled fear of flying, analysts said.

"We are seeing trends that indicate sequential improvement," said Lehman Brothers Holdings Inc. analyst Joyce Minor.

The decline was less than in the week ending Jan. 26, when revenue per room fell 14.4 percent, and the week of Jan. 19, when it fell 11.3 percent from a year earlier, Smith Travel said.

When revenue per room begins rising later this year from 2001 levels, it "should be a positive for earnings and for sentiment," Minor said.

The latest week was helped by one-time events, including the World Economic Forum in New York and the Super Bowl in New Orleans, Credit Suisse First Boston analyst Brian Egger said. The forum generated more than $100 million for New York's hotels, restaurants and stores, Egger estimated.

The week ending Dec. 22 was the only period since Sept. 11 when the decline from a year earlier was lower than in the last week of January. Revenue per room fell 5.3 percent before Christmas, helped by holiday travel rather than business travel, analysts said.

Leisure travel has returned faster than business travel, Minor said. For the week, so-called "upper-

upscale" hotels such as Marriotts and Hiltons reported revenue per room down11 percent, while it fell 3.4 percent at midscale hotels,, Smith Travel said.

"Even so, when you look at the midweek results and you see revenue declines and same-store declines of only 12 to 14 percent, that's really encouraging," Minor said. "That's about where the industry was before Sept. 11."