The report shows occupancy at county hotels climbed nearly two percentage points to 69.06% from January through August, compared with 67.28% at the end of 2001 and 72.77% in 2000, the peak year for occupancy.

The figures for Orange County and other Southern California hotel markets are promising "in spite of the doom and gloom that has regularly been reported" about the industry, says the report by Jordan Richman, a Grubb & Ellis senior vice president.

Orange County has benefited from the presence of resort hotels that draw visitors who drive in for a getaway or a vacation, including a number of new properties, Richman tells GlobeSt.com."People are driving in for getaways rather than flying to other places either in the United States or other countries," Richman says.

Richman's study, based on research by Grubb & Ellis and figures from PKF Consulting, shows that the average room rate dipped to $112.11 in Orange County for the first eight months of the year, down from $113.56 in 2001, the most recent peak for room rates. At the same time, the gross daily revenue per 100 rooms increased to $7,742 this from $7,640 last year, although it remained down from the peak of $8,015 in 2000.

On balance, Richman says, the figures show Orange County's hotels "tracking better than last year," although he cautions that the hotel industry in general faces a couple of worries. "One of the only negative factors is that insurance rates have increased dramatically since 9-11, especially for liability and terrorism insurance," Richman tells GlobeSt.com.

Hotels are also facing higher labor costs, he says, but most owners are on firm ground, especially those who bought their properties before the peak year of 2000. "Owners who purchased properties on or before 1998 are in a fairly good position in that their business may indeed be down in 2002, but their purchase and debt were based on 1998 figures or earlier and thus they can weather the storm," his report concludes.