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ATLANTA-With an improved occupancy level of 65%, the area’s 80,000-room hotel inventory is showing signs of improvement but won’t be on solid ground until 2004 and 2005, according to a new industry report by Marcus & Millichap.

New construction will add only 1,000 rooms per year through 2005, compared to 2,800 rooms per year in the late 1990s. The average daily room rate has dipped 1.5% to $73.70 from $74.85 a year ago. But local hoteliers aren’t offering the same freebies their Orlando counterparts are throwing at their tourist-oriented clientele.

“Operators in Atlanta need not offer the discounts found in Orlando, as business travelers that make up a larger percentage of Atlanta visitors, are not as sensitive to room rates as leisure travelers,” says Adam P. Weber, M&M’s senior market analyst in the company’s Phoenix office.

The occupancy mark in July 2002 stood at 65.2%. Revenue per available room measured 1.8% lower in 2003 than in the prior year, “considerably better than many markets,” Weber notes. Investment sales, however, are in the dumps.

“As a result of the weak market fundamentals, only a few properties were reported sold in the first half of 2003, all of which were small to medium economy motels,” the analyst says. “Sales activity will remain sluggish until business travel increases and occupancies rise in response.”

The M&M report puts the number of hotel and motel rooms in the metro Orlando at an estimated 140,000, considerably larger than the 115,000 to 120,000 figure being touted by local tourism officials and chambers of commerce. The M&M study shows Miami with 50,000 hotel-motel rooms; Tampa, 48,000 units; and Nashville, 46,000 rooms.

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