NEW YORK— As hotel companies slowly begin to recover from the devastating blows to their stock prices, many analysts are revising earnings forecasts for 2001 and taking a look at how the industry coped with Sept. 11 terrorist attacks. Despite the threat of price gauging at many airport hotels that were flooded with demand from thousands of stranded travelers, Gary Carr, director/communications for PKF Consulting stated, “We didn’t see any price gauging. In fact it was just the opposite.” Carr said PKF has heard of many reports of travelers that were stranded in destinations and allowed to extend their stays at hotels for discounted rates, noting the general consensus was that, “we’re all in this together.” Bjorn Hanson, hospitality analyst at PricewaterhouseCoopers, stated that, “some hotels shifted to their high rate schedules as they would during any high occupancy period,” but that overall the industry “used restraint where there could have been opportunities [for price gauging]. Most hotels were being very helpful to the stranded travelers.” Hanson said some hotels offered coffee and water stations, and tried to create places where guests could gather and be together. However, it was “more of a local decision than a corporate decision, but we didn’t find any cases were there wasn’t flexibility.” He noted that most hotels were waiving cancellation fees or offering points towards future stays. The only markets that were maintaining late cancellation charges, according to Hanson, were those “where guests were not arriving by air. In some markets, less than 5% of their guests arrive by air.” Both PKF and PricewaterhouseCoopers have revised their earnings forecasts for the remainder of 2001, reflecting the anticipated decline in travel resulting from the attacks. PricewaterhouseCoopers has predicted that leisure travel will decline, especially in New York, due to the disruption in air travel and concerns about safety. Hanson noted that large hotel corporations with properties heavily centered around the metropolitan U.S. markets will see the largest declines, while those operators in secondary and suburban markets may fare the best. This has proven true so far on Wall Street, where analysts have seen declines in stock prices in the double digits for major operators like Marriott International, Starwood Hotels and Resorts, and Cendant Corp. Hotel companies that have properties loacted in the Midwest and the center of the United States, like Boykin Lodging and John Q. Hammons Hotels, are seeing the smallest declines in stocks prices so far. Both PKF and PricewaterhouseCoopers have reported that corporate demand will most likely decline further, reflecting business pessimism, stock market volatility, the inconvenience of increased security, and the fear of flying. PKF reported that during the Gulf War, both business and leisure travelers “feared flying because of the ‘potential’ for disaster. This time around, the disaster has been actual and has taken place right here in the U.S.” PricewaterhouseCoopers noted the pullback in travel in the first quarter of 1991, during the Gulf War and the last quarter of the 1990-1991 recession, caused lodging demand to contract by 3.7% compared to the year earlier, and that the quarter negatively affected the total year 1991 REvPAR, resulting in an annual decline of 2.4%. “That experience indicated that the lodging demand took a full year to recover after the Persian Gulf War,” the PwC study reported. PwC now forecasts that RevPAR for 2001 will decline between 3.5% and 5%, the worst performance in 33 years. The annual estimates are consistent with a decline of 7% to 11.5% in the last four months of the year. To combat the decrease in travel, Hanson expects many hotels companies to “stimulate demand with special prices and discounts to increase market share.” He noted that many high-end hotels may offer special rates to compete with midsca
