Ken Kuchman and Chris Kraus, two PKF Consulting analysts, at the seminar, analyzed the effect of the economy on four Bay Area markets. In San Francisco, says the duo, hotel occupancies for 2002 will remain essentially flat, in the 68-70% range, with room rates dropping 3-5%. By 2003, rates and occupancies are expected to grow again.

Any ongoing additions to the San Francisco lodging supply are expected to be completed by the end of 2003, with any further hotel building to be "highly speculative," they say.

Silicon Valley, which includes the Peninsula and San Jose, is expected to recover at a much slower rate than other Bay Area hotel markets, as it relies heavily on the technology sector. The area is likely to remain in its current negative to flat growth stage until 2004.

Oakland hotels usually trail both San Francisco and Silicon Valley in both rates and occupancy. Since they rely on a mixed market, rather than mainly tourism or technology, their rates and occupancies are expected to remain flat through 2002, but to show a turnaround in 2003.

Developments to expand the Port of Oakland and the Oakland Airport should help boost the growth of business travel to this part of the East Bay and reflect positively on hotels there, say the consultants.

Finally, the consultants report that the stabilizing influence of government activity and the positive aspects of its drive-in market buffered the Sacramento market during the recent downturn in lodging demand. Since the Sacramento hotel market did not fall as far in 2001 as others in Northern California, it is expected to remain stable through 2002, with a definite upturn is projected for 2003 and 2004.