The decline in occupancy over the last year and a half isattributed to an increase of 3.5% in the number of hotels as wellas a drop of 500,000 guests, to 8.2 million, as compared to thefirst six months of 2000. Occupancy and room rates will improve asnew supply is absorbed, the economy revives and hotels refocustheir marketing on small group meetings and leisure travelers,according to PricewaterhouseCoopers.

Sean Hennessey, director of PricewaterhouseCoopers' hospitalityand leisure practice, notes that despite the downturn in business,New York hotels have not made concessions on their prices. "Thiswill make it easier for the hotels to enhance revenues next year asmarket conditions improve," he says. "However, room rate growthwill be much slower than in recent years because of the pricesensitivity of leisure travelers and the restricted travel patternsof traditional corporate travelers," he adds.

During the first five months of the year, the city room ratesand revenue per available room here ranked first in the 25metropolitan areas tracked by Smith Travel Research,Hendersonville, TN. PricewaterhouseCoopers recently formed apartnership with the firm.