(Brian Miller is on vacation.)

PORTLAND, OR-The events of September 11 aside, the local hotel market has been soft most of this year, especially with the addition of 515 more rooms on the supply side since March, according to a newly released survey by the Dundon Co., a brokerage firm.

Dundon, which specializes in brokering hospitality sales and development throughout the Pacific Northwest, conducts the survey every March and September. Rates quoted are corporate, which tend to be more stable and more accurately reflect what the average rate would be depending on the type of hotel, says company president Ed Dundon.

Room rates have increased an average of $6.91 in 47 properties, while 42 properties reported an average decrease in rates of $10.09. However, 79 properties reported no change in their corporate rates during the past six months.

“The purpose is to give a broad view of the market as to the rates people are charging,” Dundon reports. “It helps people understand what hotels are here, what brands are here and what rates they’re charging. We have a lot of fairly well-defined submarkets. It gives people a sense of whether or not there’s a lot of competition coming into that market.”

Local hotel owners were hoping to see a bottom in the market this year, the report notes, but the terrorist attacks last month exacerbated the problem, resulting in a projected 5% to 15% decline in room occupancies for the month after a relatively good summer season.

Four hotels opened in the past six months, bringing the area’s total number of rooms to 21,116. These 515 rooms, added to the 202 new rooms tracked in the firm’s March report, translates to only a 3.5% increase in available rooms in the past 12 months. The lion’s share of new rooms, 441, were built in Downtown Portland, with the remaining 74 built in Vancouver, WA.

The effects of a suffering economy are evident in that a year ago the area had eight hotels under construction and eight more properties planned. In March 2001, by contrast, that number declined to four properties planned and five under construction. With this latest survey the number has dwindled to one property under construction and three planned. The one under construction is the 329-room executive tower addition to the Downtown Portland Hilton, with completion scheduled for June 2002, Dundon says.

“The economy is hurting more so here than in Seattle,” he reports. “With very few hotels planned and under construction, any uptick in the economy will be good for the industry. I predict that depending on how quickly the recession turns around it will be very positive.”

Sales transactions in the hotel sector have also been very slow, the report notes, for two reasons. First, hotels on the market are overpriced, and second, buyers are unwilling to pay for an unpredictable upside. Buyers are still active and willing to pay market prices for quality, well-positioned assets. The terrorist attacks of September are expected to stimulate a bottoming out of the market, the report says.

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