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SAN DIEGO-While tourism has been down, the drive-in and group lodging market has remained brisk, protecting the area from the occupancy rate hits suffered in other markets, according to the mid-year report by R.A. Rauch & Associates.

First-quarter numbers showed a remarkable improvement from the final quarter of 2001. Year over year, hotel occupancy was down only 7.8% through April 2002 from nearly 20% in October 2001 when compared to 2000.

“Considering that the January 2001 to April 2001 period was particularly strong, the numbers show that San Diego has remained strong,” says Robert Rauch, principal.

Between October and March, the lodging industry saw occupancies hovering in the low to mid 60% range. In April, occupancy rose to 70% with average daily room rates at $109.

“Going forward, we should see a return to 1998-99 types of numbers, with occupancies above 70% the remainder of the year,” Rauch says, adding that the San Diego market should end the year at 70% and $111. This represents flat occupancy and room rate growth. “When compared to the leading cities in the United States, San Diego is one of the strongest in both hotel industry performance and its status as a desirable destination.”

The region is capable of absorbing several thousand new hotel rooms over the next several years as a result of its expanded Convention Center. New construction is warranted in the Downtown area and coastal communities such as Del Mar, Carlsbad and La Jolla.

The real key to the strength of the lodging market will be the return of business travel, which took a hit even before Sept. 11 but went into a freefall afterward. The gradual improvement of business travel nationwide and the group room blocks promised by bookings at the convention center bode well for San Diego’s market, according to Rauch.

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