U.S. Hotels Get Weak Post-Iraq Travel Bounce

LOS ANGELES— The U.S. hotel industry is likely to face declining room revenues for the third year in a row in 2003, even though occupancy rates could improve this summer as vacationing families take to the road, consultant PricewaterhouseCoopers said today. Although business for hotels has shown signs of improvement since the end of the war in Iraq, those gains will not be as strong as previously expected, PWC analyst Bjorn Hanson told Reuters. PWC forecast hotel occupancy during the Memorial Day weekend exceeding 2001 and 2002 levels and saw summer season hotel occupancy up 0.6%to 68.1% for the period between Memorial Day and Labor Day. Hanson said improvement in the second half of the year would be tempered by economic performance and consumer spending which had not improved as much as expected following the U.S. war on Iraq. “As we enter the summer, we will have hit bottom,” he said. For the full year he forecast revenue per available room or RevPAR, the key indicator of industry health, would fall 0.4%, the third year of contraction. Occupancy would drop to 59.1% of rooms from 59.2% and the average room rate would slide 0.3% to $83.46 from $83.71. Before the war began, Hanson had expected rates to rise 0.5% for the year. The war began and ended later than expected, and as a result potential vacationers had less time than hoped to put the conflict behind them before making plans, Hanson said. SOURCE: Reuters