Future for Local Hotel Industry Looks Bleak

BOSTON-As hotel occupancy rates for this month continue their downward spiral, local lodging-industry experts tell GlobeSt.com that relief does not appear to be coming anytime soon. In fact, if their predictions are borne out, conditions will continue to worsen before they improve.

John Southard, chief economist for Torto Wheaton Research, characterizes the recent terror attacks coupled with the recession as a “one-two punch. In terms of all markets, this one is a brutal one,” he tells GlobeSt.com. “The recession and the stigma effect–mainly the fear of travelling–make our forecast for the upcoming 12months the worst the market has seen since 1987.” According to Torto Wheaton Research’s most recent numbers the yearly average for occupancy rates, which Southard is quick to point out includes the eight months before the attacks, indicate a 10% drop in occupancy rates in Boston hotels. Southard notes that even through 2002, he expects to see little improvement. “It will take a year and a half to come out,” he says. “Even then, I don’t expect 2003 to be as good as 2000.”

Southard adds that another source of concern for the industry is that in addition to falling occupancy rates here, room rates are also dropping. He says that room rates for 2001 are 3% below what they were. “That further impacts profitability,” he points out.