NEW YORK— According to the latest UBS Warburg Lodging-Heard from the Market report, business in the beginning of 2003 is similar to that of the end of 2002— sluggish. Hotels reported to UBS Warburg that year-over-year room revenues remain under pressure in January due to continued weak business travel demand, lower negotiated rates and shorter small/medium group booking windows. It is anticipated that January 2003 RevPAR will be flat to up 5% for five of the 12 largest U.S. markets. Five markets are expecting January RevPAR to be flat to down 5%, while Boston and Philadelphia are expecting the largest RevPAR declines, down 20% to 30% and 10% to 15%, respectively. Corporate groups are booking later, shopping for “value adds” and treading carefully in case of war with Iraq, causing hotels to get very competitive with their packages, noted the report. Meanwhile, luxury hotels are losing market share as some companies have decided not to do business with them. Other corporate clients have gotten very aggressive in securing lower prices in 2003 than 2002 in order to continue using luxury properties, which is driving down RevPAR at these hotels.
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