Thomas J. Corcoran Jr. made the Q3 assessment in a teleconference hosted by Deutsche Banc Alex Brown. In the annual "Global High Yield" virtual conference, Corcoran said hotel occupancy levels have shown moderate improvement from the sharp lows resulting from the Sept. 11 terrorists' attacks. A 17% RevPAR decline appears to be looming, but it's down industrywide as everyone knows. FelCor's RevPAR dipped 10.1% in July, 11.6% in August and 31% in September, according to the REIT. The lowest point was recorded Sept. 16. "Since that time, hotel occupancies have begun to rebound on a daily basis and trends continue to be encouraging," Corcoran says.

In the third week of September, FelCor recorded an overall 54% occupancy, up six points. On Sept. 29, it was 62%. "America is getting back to business," Corcoran assesses in a prepared statement. The September level approximates FelCor's break-even cash flow after interest costs, he adds.

FelCor shareholders were forewarned of a Q3 earnings revision when the REIT axed a planned merger with Washington, DC-based MeriStar Hospitality. Corcoran wasn't available for an interview, but his prepared statement strongly indicates that something is being kicked around for late 2002. After the merger cancellation, Corcoran told GlobeSt.com that it was too early to say if the deal would be resurrected. The immediate focus was for both companies to regroup from the industry's setbacks, MeriStar did just that in a management shuffle.

FelCor's per key asset value is now $65,000 instead of the usual $100,000, according to estimates. "We believe there has been an over-reaction in the equity markets to September's softening in lodging demand and there will be substantial opportunities for FelCor by late 2002," he says, without elaborating.