Local hotel owners were hoping to see a bottom in the market this year, the report notes, but the terrorist attacks last month exacerbated the problem, resulting in a projected 5% to 15% decline in room occupancies for the month after a relatively good summer season.

Four hotels opened in the past six months, bringing the area's total number of rooms to 21,116. These 515 rooms, added to the 202 new rooms tracked in the firm's March report, translates to only a 3.5% increase in available rooms in the past 12 months. The lion's share of new rooms, 441, were built in Downtown Portland, with the remaining 74 built in Vancouver, WA.

The effects of a suffering economy are evident in that a year ago the area had eight hotels under construction and eight more properties planned. In March 2001, by contrast, that number declined to four properties planned and five under construction. With this latest survey the number has dwindled to one property under construction and three planned. The one under construction is the 329-room executive tower addition to the Downtown Portland Hilton, with completion scheduled for June 2002, Dundon says.

"The economy is hurting more so here than in Seattle," he reports. "With very few hotels planned and under construction, any uptick in the economy will be good for the industry. I predict that depending on how quickly the recession turns around it will be very positive."

Sales transactions in the hotel sector have also been very slow, the report notes, for two reasons. First, hotels on the market are overpriced, and second, buyers are unwilling to pay for an unpredictable upside. Buyers are still active and willing to pay market prices for quality, well-positioned assets. The terrorist attacks of September are expected to stimulate a bottoming out of the market, the report says.