NEW YORK— Standard & Poors is keeping its “underweight” recommendation on hotel industry stocks, noting that U.S.-led military action against targets in Afghanistan on Oct. 8 are expected to make the public ever more wary of traveling. The industry was already seeing relatively weak demand for rooms before the Sept. 11 terrorist attacks that precipitated the Oct. 8 airstrikes. The U.S. economys slowing growth was limiting revenue and profits. Weaker business travel was also hurting industry results, and rising U.S. unemployment was dampening consumer spending on leisure activities. The September 11 assault— and the military response— have heightened concerns over economic weakness and consumer wariness. These have the potential to cause further deferrals and cancellations of business and leisure travel. Without any additional external terrorist or war-related negative events, S&P expects a gradual rebound in occupancy rates in the next few months. But with a weak U.S. economy, and the vulnerability of this industry to future events, S&P advises a cautious stance.
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