During the first half of the year, the occupancy rate at a key sample of Spokane and Eastern Washington hotels climbed to 64.3% from 62.2% percent in the year-earlier period. In the first half of 1988, occupancy rates were as low as 56.8%, says Wolfgang Rood Hospitality Consulting, of Bellevue, Wash., which surveys the Northwest hotel industry regularly.

The boost in demand increased the average daily room rate as well by 2.6% to $65.33, while statewide room rates fell slightly. Another indicator of lodging-industry growth here are revenues derived from a 2 percent tax by the city and the county on room charges at establishments with more than 40 rooms. Both the city and county reported double-digit growth in room-tax revenues in the first quarter of this year.

Ron Anderson, Spokane-based regional manager for WestCoast Hotels Inc., says a boom in lodging construction here several years ago—especially the building of inexpensive, limited-service hotels—glutted the market with hotel rooms. Since 1998, hotel construction has slowed, and demand for rooms now is starting to catch up with supply, he says.

That means new development, despite interest rates. Work has started on a 76-unit Best Western PepperTree Inn at Liberty Lake and a 127-unit Oxford Suites hotel on Indiana Avenue east of the Spokane Valley Mall. An 84-unit Marriott Residence Inn also is planned further east on Indiana.