Nov. 6--You couldn't have picked a worse time to open a luxury hotel. 

It was July 19 when the Elliott Grand Hyatt overcame construction delays and opened in downtown Seattle. The baseball All-Star Game was over. The economy was sputtering. 

Then things got worse. 

The Sept. 11 attacks pummeled the travel sector. Seattle's hotel-occupancy rate fell from 79 percent in September 2000 to 61 percent this September. Last month, the rate tumbled to 57 percent compared with 73 percent a year earlier, said Smith Travel Research, a hotel-research company. 

Industry experts say the brunt of the downturn has hit luxury hotels, and will continue to do so. 

Rate cuts will continue; capital projects will be postponed; construction projects will be stalled, said Wolfgang Rood, who runs a hospitality-consulting firm in Bellevue. 

"It's obvious that hotels with $100 room rates and over 200 rooms -- the best hotels -- are down the most," said Rood. "The business travelers who are out there are looking for hotels with lower rates." 

Elliott General Manager Doug Sears said the hotel's occupancy is mirroring the industry trend. The hotel has cut 80 of 400 jobs and is operating below projections, Sears said. He would not discuss occupancy figures, saying they are proprietary financial information. 

Sears said Chicago-based Hyatt, which bought a 49.9 percent stake in the Elliott in March, has no plans to run away. 

"We're not looking at a three-month window of investment, a six-month window of investment or a three-year window of investment," Sears said. "This is a long-term commitment. We have the wherewithal to stay with it." 

The Four Seasons Olympic Hotel also isn't releasing its numbers, but general manager Brian Flaherty said it is falling short of financial projections but is profitable. Business travel, down since Sept. 11, normally accounts for about half the Four Seasons' revenue, Flaherty said. 

Flaherty dismissed the idea luxury hotels are hurting worse than the rest of the industry. He said the Four Seasons' clientele was more "recession-proof" than other hotels. 

"These are people here worth millions or in some cases, billions," Flaherty said. "If they lose $5 million, it's irrelevant for their travel plans." 

The hotel business probably won't get better anytime soon. Fitch, a credit-rating agency, expects a rise in hotel-loan delinquencies because of lower occupancies and higher insurance premiums and security costs. 

PricewaterhouseCoopers, a consulting firm, expects hotel revenues this year to drop 7.1 percent -- the worst decline in 34 years -- even without another major terrorist attack. 

Katharine Dooley, general manager of the three-star Paramount Hotel, in downtown Seattle, said it is surviving because travelers are moving away from high-end hotels. The Paramount's occupancy was down 13 percent and revenue per room was down 7 percent in September. 

The numbers were buoyed by business travelers who wanted lower rates. Rooms at the Paramount start at $109 a night, compared with luxury hotels, which charge more than $300 a night. 

"We're seeing that corporate clients (who) normally stay in four-star hotels are now looking at three-star hotels," Dooley said. "We're picking up some of those accounts because travel departments are being told to cut expenses." 

Terry Umbreit, director of the hotel/restaurant-administration program at Washington State University, said the industry is better prepared for this downturn than it was in the early 1990s, the last time it had major financial troubles. 

Lenders demand more money upfront from developers, and lower interest rates have pushed down break-even points, which should help hotels weather the downturn, Umbreit said. 

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