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Hotels stare at 5 per cent drop in occupancy rates

Los Angeles, March 21 (Reuters): Demand for hotel rooms in the US is likely to drop 5 per cent, more than previously expected, according to an industry forecast issued shortly after the launch of an US-led attack on Baghdad.

“Our new numbers reflect that February was already bad without the war — it was the anticipation,” said senior analyst Cristina Ampil at PricewaterhouseCoopers, the consultancy that made the forecast on Thursday.

The hotel industry has struggled since early 2001, when the effects of the dotcom bust and a weakening economy turned the tide after a record year in 2000.

After the September 11, 2001, attacks, many hotels temporarily shut or reduced hours for services like restaurants. They plan to do the same if business travel slows during the war with Iraq.

That seems likely since about half of the 123 organisations surveyed by the Business Travel Coalition, a corporate advocacy group, said in a survey released Wednesday that they had tightened US travel policy for employees in response to the war with Iraq.

Travel companies are also generally waiving cancellation fees during the war.

PwC forecasts that revenue per available room, a lodging industry statistic, which measures occupancy and room rates, will drop 1.5 per cent in the first half of 2003, compared with a forecast 1 per cent increase without the war and 0.5 per cent drop if the war had started earlier.

Based on scenarios from the Center for Strategic and International Studies, PwC said a brief war of 30 days to 45 days was the most likely scenario for an Iraq conflict.

During those four to six weeks, demand for rooms would drop 4.9 per cent to 2.4 million rooms per night. The conflict would end just in time for vacationers to travel during the summer peak season.

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