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Hotels See Slowdown; 2009 Upturn Expected / Summer Summit of the
 American Hotels and Lodges Association
By Steve Lackmeyer, The OklahomanMcClatchy-Tribune Regional News

Jun. 12, 2008 -- Joseph R. Geis, owner of Edmond's Sleep Inn and Suites, first noticed that rising gasoline prices might be discouraging travel when a team from halfway across the state recently made its annual trek for a tournament in Oklahoma City.

Rooms still were booked, Geis said, but this time around the teens were loud and out of control.

"I asked around and found out that a lot less parents had decided to come with the team this time around," Geis said.

A panel of travel experts convened Wednesday at the annual summer summit of the American Hotels and Lodges Association cautioned against expecting gloom and doom for the travel industry as gasoline hits $4 a gallon.

Instead, they are suggesting that a mild slowdown this year -- typified by the absence of parents at Geis' hotel -- may be followed by a recovery in 2009.

"This is the most difficult year I've faced for forecasting since we started in 1989," said Bjorn Hanson, principal with PricewaterhouseCoopers. "You've got the lowest consumer confidence in 20 years and higher household costs."

Even so, Hanson is forecasting a drop in occupancy rates this year of 0.8 percent followed by an increase of 0.5 percent next year.

George Harmon, president of the market research firm D.K. Shifflet & Associates, provided a similar outlook, predicting occupany will drop 0.2 percent this year and return with a 0.9 percent increase next year.

"There is a lot of talk about gas and what is going to happen and whether the sky is falling," Harmon said. "We have to watch what people's behavior is ... let's keep an eye on what people do versus what they say."

Vacations still planned Vacations are typically sacred, Harmon said, and families might shorten the distances they drive or take other steps to make their travel more efficient.

"Vacations might be modified, but they are rarely untaken."

Jan Freitag, vice president of global development at Smith Travel Research, urged hoteliers not to panic and drop rates as they did after the Sept. 11, 2001, terrorist attacks. Freitag reported the nation has 48,835 hotels with a 60 percent occupancy rate and average room rate $107.80.

"Hold your rate," Freitag warned. "So many things are different. If you look at the downturns in 1991 and 2001, you will see that supply came off a time when it was relatively hot. Today we're coming off a relatively low point."

Freitag said the country isn't experiencing a "hit the panic button" moment as it did in late 2001. And while weekend occupancy rates this year are dropping, Freitag said revenues are holding steady for the hotel industry.

"You can't induce demand by cutting rates," Freitag said. "The business traveler is coming anyway. ... You have to pass some of your higher costs on to the consumer."


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