NEW YORK— Natural disasters are prone to quickly being turned into a numbers game. How many dead? How much business lost? How many missing? How much will it cost to make it like it was before? The devastation wrought last year by Hurricanes Katrina and Rita on Louisiana and the neighboring Gulf States posed these questions in the aftermath, but unlike contained disasters, the widespread impact of the storms likely will never produce exact— or simple— answers in terms of numbers. When it comes to lodging, the picture becomes even more skewed. In New Orlean— a magnet for tourism and large-scale conventions pre-Katrina— guests fled the core city hotels in the French Quarter, central business district, Warehouse District and Riverfront, even though the majority of those properties did not suffer severe damage. “Properties closed as a result of the hurricane coming in. They really weren’t closed because of damage,” said Bruce Ford, president of Portsmouth, NH-based Lodging Econometrics. “As soon as there were emergency workers or people who could be paying guests that could stay in the hotel, they opened— if they had employees.” According to the Louisiana Office of Tourism Research, more than 75,000 persons— and perhaps as high as 85,000— were directly employed by the tourism industry in the New Orleans metropolitan area in 2004 (the latest figures available). The majority of the destruction in the Ninth Ward— the hardest hit area in New Orleans— involved residential areas that housed many of the city’s workers, including those who were part of the tourism and hotel industry. Large portions of those residents, which have been displaced to other states, have not returned. “If you talk to people in the marketplace, they would tell you that the tourism isn’t there, and they would say it’s not there because the media’s presentation of New Orleans is that it’s a destroyed city. But the French Quarter and the Garden District were not really affected. They got a lot of high winds, they got some water— it’s nothing like the Ninth Ward was or what happened by the Superdome,” said Ford. “What you’re up against there is you have hotels whose employees are staying in the hotel because they have no place to live, you have recovery efforts still there, contractors still there, you have the convention and visitors bureau trying to get tourism going again. Plus it’s the hurricane season and nobody’s going to book anything,” said Randy McCaslin, a vp in PKF Consulting’s Houston office Statistics from the New Orleans Tourism Marketing Corp. show that as of presstime there were 178 metropolitan area hotels/motels in operation, representing 27,921 rooms. Prior to Katrina, there were 265 hotels with an inventory of 38,338 rooms. Ford said, “Hotels that got six or eight or 12 inches of water recovered just fine; any property that got six, eight or 12 feet of water didn’t recover very well at all.” He said, however, that there were “very few” of the latter, citing less than 15 properties that were small, limited-service hotels and the majority of those being in areas outside of the downtown area and notably between the Ninth Ward and the airport. “When I speak about the ones that were totally destroyed, I’m talking about the Ninth Ward. There’s nothing happening there and there isn’t going to be. Even if you had the opportunity to go in and try and open them, it wouldn’t make any sense. No one’s going in there,” said Ford. “In New Orleans right now it’s not that there’s nobody there. The operating performance numbers on the surface, when you look at ADR, occupancy and RevPAR, they look pretty good for a big city. But what is not clear by just looking at those three numbers is that the rooms available for sale per night are down some 20%-plus in terms of the total market. There’s 20%-plus less rooms available per night in the entire market. Therefore, as a result of that, even though demand is down close to that, it’s still actually a positive number,” said Ford, adding: “It’s got a long way to go.” Bobby Bowers, senior vp of Smith Travel Research, said that when looking at occupancies, for example, the year-to-date numbers are about 68%. “When you see that it makes you think that occupancies should be higher down there just because you continue to have workers and people who are still displaced,” he said. For example, he said that supply numbers were down 27% year-to-date in July but demand was down 28%. In the latest total figures available from STR, percentage changes year-over-year for New Orleans as of June show occupancy down 1.3%, ADR up 13.4%, RevPAR up 11.9%, supply down 25.9%, demand down 26.9% and revenue down 17%. Bowers added reporting on occupancies and other fundamentals is becoming difficult because of the way data is being reported by some hotel companies and is centered on the issue of rooms available. “What’s going to happen is when they get back online, they’re going to show some really good increases. Occupancy numbers and RevPAR numbers are going to be artificially depressed because they’re reporting full but they don’t have that to rent. They just want to keep it an apples-to-apples comparison and they’re going to base it on the full house. They’ll say they’re going to recognize that this time period the asset was just not as productive. The reason it wasn’t is because they didn’t have those rooms to rent,” he said. Bowers said that other companies take a different tact. “They’ll come to us and say we’ve got 200 rooms and we can only rent 100 rooms. We’re basically going to take the 100 that we can’t rent out of the inventory and just report on the 100. What you’ll see when you get to the next year and you get the comparisons is a drop,” said Bowers. Still, in a report compiled by STR for the New Orleans market in August, out of a universe of 278 hotels, 91 properties reported they had zero rooms and/or were closed. PKF’s McCaslin noted that he and his team also see data gathering as a challenge. “We had to go into those hotels when they were 99% occupied after Katrina and say, ‘OK. Once this all shakes out, where are you going to be occupancy wise? How much increase in demand is there being generated by ongoing business that will be here, not just temporary, and try to project that.’ It’s a moving target, and I think until after this hurricane season is over nobody can really put their finger on anything because it’s still not completely rebuilt and not secure. If they dodge this hurricane season then there’s hope for the future. If they don’t, they might as well let the river run through.” Ford noted that there are redevelopment projects downtown involving taller buildings that were affected by the hurricanes [see main story]as well as other projects. For example, he noted that on Tulane Ave. downtown, there was a 175-room Wingate Inn under construction when the hurricanes hit that has restarted development and is expected to open in fourth-quarter 2007. Similarly, Harrah’s new 450-room tower project that came on line this week on Poydras Street had slowed, but didn’t cease. As of the second quarter in the New Orleans CBD and French Quarter there were three properties representing 829 rooms under construction, one 85-room property set to start in the next 12 months and three properties representing 645 rooms in early planning. In the Metarie/Airport area, one property representing 86 rooms was under construction, one 80-room hotel was expected to start in 12 months and two properties representing 267 rooms were in early planning. In East New Orleans/ Slidell, there is one property representing 84 rooms under construction, three representing 231 rooms ready start and three representing 220 rooms in early planning. According to Lodging Econometrics,second quarter supply in the three areas was 114 hotels/24,498 rooms, 76 hotels/8,857 rooms and 31 hotels/3,017 rooms, respectively. Among the supply at Q2 segment wise are: luxury (7 hotels; 2,684 rooms), upper-upscale (16 hotels; 8,898 rooms), upscale (20 hotels; 4,032 rooms), midscale with food and beverage (35 hotels; 5,708 rooms), midscale without food and beverage (38 hotels; 4,515 rooms), economy (28 hotels; 3,348 rooms) and independent (77 hotels, 7,187 rooms). Ford said that while some hotels went out of the pipeline, “it’s hard to kill a project because it’s still a piece of land that could be developed. And the theory of having a new hotel in a marketplace of properties that are depressed a little bit is a pretty enticing investment opportunity.” In terms of development, he added, “It’s really going to be a little spotty for awhile. For anybody to really get excited about building a new hotel in New Orleans it’s going to be about improving demand, and demand has got a long way to go.” McCaslin experienced first-hand how lack of demand was affecting the city. He and his team from Houston went to Baton Rouge to do some studies. Traveling to New Orleans at one point, the team went into the French Quarter to get something to eat. “We pulled up to one place and a guy walks out and said, ‘Will you all please come and eat in our restaurant?’ We walked around and there were daiquiri bars with nothing but the employees behind the counter, jazz bars playing jazz with just one or two people, police everywhere. It’s spooky. It’s like a ghost town,” said McCaslin. “It’s going to be a different world when it all shakes out. I don’t know exactly what that’s going to look like.” Like tactics taken by New York hoteliers in the aftermath of the Sept. 11 terrorist attacks, Bowers felt that hotels in New Orleans and other affected areas are going to have to continue to offer deals and do deep discounting to attract a dubious travel population. “People have a perception about the market,” said Bowers, noting many are unsure about the infrastructure or whether the city has the ability to protect them from crime. “I really think that’s a problem that they have to overcome. I think it’s kind of an uphill battle for these guys.” He did not think the city would be fully recovered by the time the lodging cycle turns down. “They’ll be headed that way. Right now we’re definitely past the peak, and it’s anybody’s guess how quickly we reach the trough. But New Orleans— realistically— before it fully recovers, you’re looking at three to five years. I think the long-term outlook for the city is good. It’s just going to take time.”