In Las Vegas, New York, Washington, DC, Miami, Orlando, Tampa and Philadelphia occupancy rates are already at or near historical highs, an indication, Ford says, of where the industry is headed. "If you keep your eye on those bellwether cities, you will get some indication of how strong the lodging cycle is going to be after the peak in 07," he notes.

Helping to shore up occupancy rates is a decline in the anticipated number of hotel rooms expected to come online in both 2006 and 2007. Revised statistics from Lodging Econometrics show that 1,087 new hotel projects will put 115,956 rooms on the market next year, a decrease of 3,470 rooms over initial projections. In 2006, 775 projects will come on line, adding 80,951 rooms, or 4,796 rooms less than expected, to the market. The drop in those numbers, says Ford, is largely due to the rising cost of building materials which has created problems for developers trying to complete projects on time and within a projected budget.

With all those new rooms coming on line in 2006 and 2007, industry watchers say absorption rates should continue to keep profit levels high at least until 2008.