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Unaffected by Travel Fears; Only Economic Conditions Affecting Demand in Most Markets |
| Atlanta, GA, August 22, 2002 - Recently released lodging forecasts
from Boston-based Torto Wheaton Research (TWR) and Atlanta-based The Hospitality
Research Group, the research affiliate of PKF Consulting (HRG), reveal
that air travel stigma effects on hotel room sales following September
11, 2001 have disappeared in all but 13 major cities. And in these 13 cities,
the effects have substantially dissipated. Air travel stigma is defined
as the reduction in air travel occurring since September 11th due mostly
to psychological and emotional reactions. The adverse effect on lodging
demand from these reactions is estimated separately from any economic reactions
caused by the terrorist events.
Estimates of air travel stigma on hotels are based on an analysis of special variables introduced into HRG/TWR lodging market models. A study of prior catastrophic events during an economic downturn, specifically the Gulf War and the 1990-1991 recession, helped isolate the initial air travel stigma effect in each city. Since September 2001, economists at TWR and HRG have tracked the rate at which this effect is wearing off. According to Dr. Jack Corgel of HRG, "The most recent evidence places nearly all of the weight on economic conditions, rather than on the fear of flying, to explain the slow recovery of U.S. hotel markets." 
By the end of 2002, a small stigma effect on hotel room sales is expected to remain for only a few markets that are highly dependent on fly-in customers. These markets include Atlanta, Boston, Dallas, New York, San Francisco, Tampa, and Washington D.C. "Assuming that we are able to avoid a "double-dip" recession, this could be the beginning of the good news story for the lodging industry," noted Mark Woodworth of HRG. Based on Smith Travel Research data for the top 75 lodging markets that comprise the HRG/TWR sample, demand in the second quarter of 2002 was only 0.6% below the 2001 level. RevPAR declined 7.4% during the second quarter as a result of a 4.2% decrease in average daily rate and a 2.9% increase in supply. "Lower levels of new construction in the quarters ahead, combined with expected improvement in demand, suggests that we have begun to return to more attractive industry fundamentals" Woodworth stated. PKF Consulting is an international consulting and real estate firm specializing in the hospitality industry. |
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Jack Corgel Managing Director of Applied Research The Hospitality Research Group of PKF Consulting 3340 Peachtree Road, Suite 580 Atlanta, GA 30326 (404) 842-1150, ext. 227 Gary Carr
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| Also See | Will Hotel NOIs and Property Prices Follow Revenues in Their Downward Spiral? / John (Jack) B. Corgel, Ph.D / Hospitality Research Group of PKF Consulting / June 2002 |
| 2002 Hospitality Investment Survey Finds Declining Values Due to an Uncertain Market / PKF Consulting / July 2002 |