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WASHINGTON, DC-The hospitality industry has been one of the sectors hardest hit by economic fallout resulting from the terrorist attacks here and in New York September 11. The hotel industry in Washington has been doubly impacted, both by corporate decision of hotel real estate investment trusts based here, and local hotels themselves, which have seen occupancy rates falter substantially as Ronald Reagan National Airport is one of the few in the country to remain closed.

One of the biggest signs that the region’s hotel players are taking a beating, Washington-based MeriStar Hospitality Corp., the nation’s third-largest hotel REIT called off its $2.7 billion merger with FelCor Lodging Trust of Irving TX late last week. In a statement released at the time the merger was terminated, FelCor president and chief executive, Thomas Corcoran Jr., blamed the terrorist attacks. “The termination of this merger is the result of the recent tragic events and their subsequent adverse impact on the financial markets,” Corcoran said. MeriStar has sense announced significant changes in its business. Paul Whetsell, who echoed Corcoran’s sentiments, will remain chairman and chief executive of MeriStar Hospitality, a REIT, and MeriStar Hotels & Resorts, a management company. John Emery, who had been chief operating officer of the REIT, was named COO of the management company also. And Bruce Wiles, who was chief investment officer of the REIT, was given that role at MeriStar Hotels as well. Emery had been CIO at the management company.

Not only was MeriStar adversely affected, but also Bethesda, MD-based Marriott International and Host Marriott–the nation’s largest hotel REIT–have seen their outlook tumbles, as one of the Marriott properties near the former trade center towers was destroyed, and another was severely damaged. Marriott employees said they would donate their vacation pay to 1,100 fellow company workers who may lose their jobs because of the terrorist attacks.

The attacks destroyed the Marriott World Trade Center, which stood in the towers’ shadow and seriously damaged the Marriott Millennium Hotel across the street from the trade center. All workers from both hotels will remain on the Marriott payroll through October 5, and then the donated time will kick in for those in need. Some 1,500 Marriott workers have donated the equivalent of $2 million in vacation days and personal leave time for those displaced from the two hotels, a Marriott spokesman said.

Not only has the Washington economy suffered a terrible blow because these major hotel corporations are facing tough times, but the local hotels, owned by these REITS and other competitors are taking a drubbing, as National Airport remains closed. In the District, Mayor Anthony Williams is pushing for the re-opening of National Airport because of the serious effects on the hotel industry here. The mayor said in a report that hotel occupancy rates have been slashed in half since the September 11 attacks.

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