In order to gauge the imminent and short-term impact of the tragic events in New York City and Washington DC, HREC surveyed a large sampling of Denver area hoteliers.  This survey has indicated that the month of September was predicted to be a strong month for local hotels; however, it now appears occupancy levels will be down 40% to 50% for the month.  �The attacks in New York City and Washington DC have had a profound impact on the hotel industry locally and nationally,� says Hallman.  �However, if America gets back to business and the airlines return to somewhat normal operations, we project that by year-end 2001, hotel revenues will only be down 3% to 8% for the year as compared to year-end 2000.�  

Salient aspects of this survey are presented below.

• In the days immediately following the terrorist attacks in New York City and Washington DC, the Denver hotel market experienced a drop in occupancy levels.  However, due to the grounding of national air service, occupancy levels at hotels located near Denver International Airport (�DIA�) did not initially decline as a result of the large number of stranded airline passengers.  Additionally, the downtown lodging market was not immediately affected significantly as a result of an international city-wide convention that was already underway.  Furthermore, while the downtown hotels lost some weekend business, convention delegates that had to extend their trip over the weekend as a result of the reduced air service replaced a portion of this lost business.

• During the week of September 17, 2001, overall hotel occupancies in the Denver area fell 60% to 70% compared to budget and last year.  Most hotels experienced strong cancellations and no shows from both groups and transient guests.  However, a significant percentage of cancelled group business has tentatively rebooked for periods in October, November and December.  Furthermore, a number of hotel operators have indicated that transients guests have started to rebook reservations, but at a slower pace as compared to historical levels.

• Early indications are that hotel occupancy levels in the fourth quarter will be below projections and historical levels.  However, most hoteliers have indicated that group business for October and beyond have not cancelled as of this time.  Nonetheless, most area hoteliers expect a higher than normal attrition rate from group participants.  Corporations still need to conduct business and will still need to travel, however, corporate travel will most likely decline commensurate with the level of economic slowdown nationally.  

• Prior to the events of September 11, the Denver area lodging market appeared to be heading for a year with minimal growth in room revenues as compared to years past.  According to Smith Travel Research, through July 2001, room revenue in the Denver area lodging market was up 1.1% over the same period of 2000.  However, as a result of the events last week, the Denver area hotel market will most likely see a decline in revenues for year-end 2001 of 3% to 8% as compared to 2000.

• Many hotel companies are in the process of re-forecasting occupancy and average rate projections for the remainder of 2001.  Most local hotel managers believe it is premature to make any projections for 2002, as there are still many unknown variables.  However, for the most part, hotel operators remain cautiously optimistic about performance levels next year.