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BOSTON-As the anniversary of the Sept. 11 terror attacks nears, the city’s hotel market continues to contend with the aftershocks of the event even as its occupancy rates are slowly climbing back to normal levels.

“The general trend is positive,” Matt Arrants, a vice president at Pinnacle Advisory Group, tells GlobeSt.com. Arrants tracks the Boston hotel market for the research firm. Arrants points out that while occupancy rates are coming back it is the room rates that are the big issue. “Basically,” he says, “hotels are giving up rates for occupancy levels.”

Arrants notes that this past April, occupancy rates at 75.1% for the Boston/Cambridge area, were actually above the rates of April 2001, when they were 74.5%. But at the same time room rates were off nearly 15% with average room rates for this past April at $168 as compared with average room rates for April 2001, which were $198.15

The decrease in business travel over the past year led hotel operators to need to get the leisure travelers to fill the void. Those types of customers, Arrants says, respond to drops in rates. “Business travelers are far less rate sensitive,” he points out. The drop in international travel has also impacted local rates.

The success of dropping room rates was coupled with an intensive marketing campaign put out by the Greater Boston Convention and Visitor’s Bureau in the first quarter of this year. Together, the two factors were able to stimulate demand. “Last January, you couldn’t get anyone to come to Boston,” says Arrants. Occupancy rates were at 49.1% versus 58% for the year before. But by February the gap had narrowed with occupancy rates at 62% versus 65% for the year before. “We’re seeing a trend of occupancy rates coming back to normal,” says Arrants.

This past July occupancy rates were only down two percentage points as compared with the previous July. While average room rates were still off 10% in that month as compared with the previous year, Arrants emphasizes that that is significantly better than the previous months when room rates were off 15% as compared with the previous year.

“We’re seeing a gradual improvement,” he stresses but quickly adds that it has been “impossible” to understand what were the real underlying causes of this latest hotel slump. “What is the economy as opposed to 9/11? How much of it is because plans flew out of Boston?” says Arrants.

But despite those difficulties Arrants says that the hope is that by the end of this month there will be more demand in the industry. The challenge, he says, will be for hotel operators to increase their average rates. “The trend is there and is likely to continue but the question is how quickly it will happen.”

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