Sep. 4--When Dallas area hoteliers talk about business prospects this fall -- usually the year's busiest business travel season -- they take a deep breath. 

Occupancy rates, which dropped drastically after Sept. 11, have gone up every month this year, but not as quickly as many industry leaders had hoped. Area hotel operators say bookings look OK for next few months, but they aren't strong enough to make hotel operators breathe easy. 

October, usually one of the busiest months for hotels, is not booking quickly. And September -- when Labor Day, Rosh Hashanah and Yom Kippur always hurt occupancy -- is taking an additional hit because of the Sept. 11 anniversary. 

"It's a very mediocre year," said Gerald Wolsborn, general manager of the Adam's Mark Hotel in downtown Dallas, which gets about 80 percent of its business from meetings and conventions. "We're still battling the economy and Sept. 11." 

At the Wyndham Anatole, business is expected to be 75 percent or 80 percent of what it was last year at this time 

"It's unfortunate, but it could have been worse," said Tom Faust, Wyndham's vice president of sales and marketing. "Every day we see progress in the stock market, the more we get optimistic." 

Memories of last year's terrorist attacks are hampering business in 2002, industry executives said. September 11 is just one day on the calendar, but for hotels, the somber anniversary affects two cycles of meetings business. 

Most business groups arrive on a Sunday or Monday and leave Wednesday. Others arrive Wednesday and stay through Friday. This year, many groups have declined to book any business that week as the country marks the attacks' one-year anniversary. 

"This year, there's not much on the books," said Steve Vissotzky, general manager of the Hyatt Regency Dallas at Reunion and president of the Hotel/Motel Association of Greater Dallas. "There's a cloud over that day and that week." 

Corporate scandals and the sputtering economic recovery also are reducing demand for rooms and meeting space. 

Revenues at the nation's hotels are expected to decline by 2.3 percent in 2002, to $49.68 per room, according to a recent report by PricewaterhouseCoopers LLP. Occupancy is expected to fall to 59.5 percent, down from 60 percent in 2001 and 63.3 percent in 2000. 

In Dallas, 2002 room revenues are expected to be down 3 to 4 percent compared with 2001 figures, said Greg Crown, vice president at PKF Consulting. 

"This is a moving target, to say the least," Mr. Crown said. "We think we've already hit the bottom. Things are improving; it's just going to take time for us to work our way out of this." 

Weekly statistics by Smith Travel Research showed occupancy in Dallas area hotels was 53.3 percent as of Aug. 24, a decline of 4.5 percent compared with the same period last year. Room revenue for the week was down 8.7 percent. 

Figures for the first seven months of the year showed occupancy at 56.8 percent, a decline of 7.3 percent. Room revenue was down 10.8 percent. 

Convention and meeting business has gradually returned to normal levels over the last several months, but not under the same booking patterns, officials said. Groups are waiting longer to commit to a contract, and those that do are asking for more concessions. 

"They're asking for smaller room blocs to commit to, and they want to sign the contracts later," Mr. Faust said. 

At the Hotel Adolphus, meetings that would normally be booked at least six months in advance are now being booked with only two months' notice, said Hans Mulders, the luxury hotel's director of sales. As a result, the hotel is offering last-minute discounts. 

"It creates more rate pressure," Mr. Mulders said. "If a group calls me now for the end of September and I still have the space, I have to book it because I can't wait any longer." 

Mr. Mulders and his staff turned their attention to group business when bookings for individual corporate travelers began falling during the recession in 2001. Group reservations have grown by 20 percent, but room rates have suffered. 

"There's been incredible pressure on price," he said. "But it's better to have every room occupied." 

Mr. Wolsborn said it's been difficult to keep the hotel full. At 1,840 rooms, the Adam's Mark is the largest hotel in Texas. 

"Anything beyond six months out, there are a lot of unknowns," Mr. Wolsborn said. "There are a lot of customers who want to wait and see what the economy will do." 

John Blanton, director of marketing at the Four Seasons Resort and Club Dallas at Las Colinas, said there is an upside to the new booking patterns. Short-term bookings mean fewer cancellations, he said. 

"People are making certain that the meetings they are booking are definitely going to happen," he said. 

Four Seasons' bookings are ahead from where they were last year, due to a push in the summer to persuade groups to re-book, Mr. Blanton said. 

This year's convention season kicks off Sept. 15. That's when the National Fiber Optics Engineers Conference is scheduled to begin at the Dallas Convention Center. The conference is expected to bring 5,000 visitors to Dallas, but that's about half of the usual number, said Dave Whitney, president and chief executive of the Dallas Convention & Visitors Bureau. And the number of vendors is about 25 percent below expectations. 

"This is an industry that is obviously having problems right now," Mr. Whitney said. 

Hoteliers hope local business will improve when the multimillion-dollar Dallas Convention Center expansion opens in late September. Until then, hotel operators are scrambling to fill any remaining holes in their bookings with small, last-minute meetings. 

"The good news," Mr. Mulders said, "is there are plenty of inquiries." 

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(c) 2002, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News. FS, WYN,