"We believe that corporate travel is and will remain under significant pressure through at least the remainder of September," according to the report.

"The end result for our covered lodging companies will likely be them missing our third quarter 2001 earnings expectations."

This may be only a short-term anomaly, however, as Mills is taking particular interest in revenue per available room and earnings for the fourth quarter ending Dec. 31 and the first two quarters next year.

"While we are confident in our September outlook, we are far less certain about possible business and leisure travel trends beginning in October," according to the report.

"Our U.S. hotel contacts share the same uncertainty. We believe that October could represent a transition month whereby business gradually improves."

Even prior to the Sept. 11 national tragedy, stock in the two South Florida-based companies reflected declining customer demand as business travelers cut back in response to an already soft U.S. economy.

Stock in Extended Stay has fallen from a closing price of $17.30 on Aug. 29, for instance, to a closing price of $12.80 on Sept. 24.

Shares of Innkeepers have fallen from a closing price of $11.84 on Aug. 27 to a closing price of $7.98 on Sept. 20. The Innkeepers' issue has regained some momentum, however, closing up 21 cents at $8.16 on Sept. 24.

This volatility is causing analysts such as Mills to pause and re-evaluate the potential short-term impact of the recent disruptions on the lodging industry.

"Because we do not know when or at what level business and leisure travel hotel occupancies and RevPAR will stabilize, at this time we are not changing our 2001 or 2002 earnings estimates for our covered U.S. lodging companies," according to the UBS Warburg report.

"Instead, we intend to revisit our assumptions and earnings estimates by mid-October after we have had a chance to follow up with our U.S. hotels contacts about early October business trends, which we believe could be a better 'run rate.'"