Jun. 10--Nine months after Sept. 11, the city's hotels are humming again. Rooms are filling up, and occupancy rates are approaching pre-Sept. 11 levels. 

But there are some potentially ominous suggestions that a real recovery may still be far off. 

The city lost over 1,000 hotel rooms on Sept. 11, with the Marriott World Trade Center destroyed and the Millennium Hilton still closed. But some downtown hotels have reopened, and five new hotels have opened this year. Moreover, there are currently, 10 new hotels under construction in New York, according to PriceWaterhouseCoopers. 

"All of the major projects are moving forward," said Cristyne L. Nicholas, president of NYC & Company. 

Though hotels continue to add rooms, post-Sept. 11 business remains fragile and the rebirth has come at a cost. Hotels cut rates to lure guests back after the World Trade Center attack. And those prices have stayed down -- 10 percent to 15 percent below last year, according to PKF Consulting -- good news for the guests, but bad news for the hotels. 

"Hoteliers are still very skittish and don't feel there's enough strength in the market to increase" room rates, said Sean Hennessey, a hotel consultant at PriceWaterhouseCoopers. "They're still discounting fairly heavily." 

In addition, "there is all kinds of packaging going on to try to sell it," said John Fox, a hotel consultant with PKF. 

At four of New York's five W Hotels, for example, a guest can book a room for $300 a night and on weekends get another room free -- designed to lure families to the upscale chain. 

The New York hotel business has changed dramatically since 2000 -- the industry's last Golden Age. That year, hotels often were 80 percent to 90 percent occupied. And the average daily room rate was often higher than $250 a night, according to NYC & Company. 

The market softened in 2001, even before Sept. 11, as companies cut back on business travel amid an economic slowdown. On Sept. 16, 2001, after the terrorist attacks, New York's hotels were only 39 percent occupied. 

Guests have returned. In the first four months this year, occupancy was 71.7 percent , compared to 73.8 percent for the same period in 2001, according to PKF. 

"You've had a pretty gradual and steady improvement since 9/11," said Paul Keung, an analyst at CIBC World Markets. 

Still, hotels are making less money. Revenue per available room -- the key measure of a hotel's health -- remains down from last year. The average price of a room in the first quarter of 2002 was $185.48 per night, down from $209.02 for the same period last year. 

Analysts blame the falloff in corporate travel, which brings the highest room rates. 

"Our customer base has been made up of leisure and recreational travelers who are more price-sensitive," said Hennessey. "They keep the pressure on the rates to remain low." 

Meanwhile, hotel managers hope things keep improving but remain aware their business is vulnerable to world events. 

"Up until May we saw better numbers than last year," said Michael Silberstein, managing director of the New York Palace Hotel. "Then came the weekend of Memorial Day and the media killed it. The panic about terrorism took us back to last year's level. We lost 250 reservations at the last minute. It was unbelievable." 

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(c) 2002, Daily News, New York. Distributed by Knight Ridder/Tribune Business News. MAR,