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NEW ORLEANS-The once 38,000-room New Orleans hospitality market is finally getting a whiff of recovery, with hoteliers seeing the strongest tourism and business-based growth since Hurricane Katrina devastated Louisiana, Alabama and Mississippi coastal areas in 2005. Now, 28 months later, a return of several large conventions in the fourth quarter last year, a spate of national sporting events culminating with the four-day NBA Championship, following an early two-week Carnival Season, has hoteliers seeing a strong start in 2008.

But across the board, hotel mangers, analysts and tourism officials predict serious weakening in the last two quarters of the year. Ernst & Young has listed New Orleans among the three lowest ranking cities for investor money in hospitality, along with Orlando and Dallas.

The Bowl Conference Championship in December saw 93% occupancy metro-wide, even though the teams playing were close and far — Louisiana State University versus University of Hawaii. That was followed by the Sugar Bowl, LSU versus Ohio State University, and Ohio fans turned out in droves to fill 95% of hotel rooms. The two week period of Carnival ending Mardi Gras day (Feb. 5), saw sell-outs at most major hotels in the weekend before Fat Tuesday and occupancy in the high 90% range.

The hope, according to PKF Consulting SVP John Keeling in Houston, is that the back-to back events with national media attention shined the spotlight on the city and should change the negative perceptions the leisure traveler has of the Big Easy. New Orleans per capita remains the murder capital in the nation and surveys conducted by state tourism officials in mid 2006, when recovery was well under way, found droves of people still believing much of the city was still under floodwaters.

“These high-profile events should surely show the leisure traveler that New Orleans must be fine. Hopefully we’ll start to see an up-tick in leisure. I remain optimistic,” Keeling says. “Perhaps the biggest test is the NBA All Star four-day event, when 1,000 members of the national and international press descend on the city. Their perceptions of the city could carry serious weight.”.

Overall, PKF reports that occupancy dropped in the city nearly 1% in 2007, from 2006′s 62.9% to 62%. The ADR fell 5.7% from $129.59 in 2006 to $122.19 by the end of 2007. RevPar fell 7.4% from $81.52 to $75.71.

Fred Sawyer, general manger of the 1,600-room Hilton Riverside New Orleans Hotel and chairman of the Greater New Orleans Hotel & Lodging Association, says things are notching up, but not for small independent hotels, particularly those in the French Quarter. “It was a good Mardi Gras and BCS was fabulous business, and now we have four days of more national exposure coming up with the NBA All Stars,” he says.

Keeling says that convention activity is picking up for the first two quarters of 2008 and major hotels have beefed up sales teams to attract self-contained group meetings, particularly in properties with 100,000 sf of meeting space or more. That has a lot to do with the easing of meeting groups’ ability to obtain insurance to hold conventions in the 1.1-million-sf Ernest N. Morial Convention Center after two hurricane seasons.

Sawyer says his sales team has been working overtime booking group meetings, and the larger hotels with significant meeting space are far better positioned for the slowdown. “We’re budgeted for 2009 to hit our pre-Katrina numbers,” Sawyer says. For now, while room revenue is “a little off,” that income is being offset by an increase in self-contained banquet and meeting business. “The truth of the matter is our in-house meetings generate a lot of ancillary revenue,” Sawyer says.

Spokeswoman Mary Beth Romig of the Greater New Orleans Visitors and Convention Bureau says that the last few months of 2007 and the first quarter of this year should be the best since Aug. 29, 2005, the date the storm struck. Analysts, hoteliers and meeting planners anticipate a dead market for the remainder of year.

Ironically, Romig says, it was relief workers, government agencies, volunteers and emergency personnel who drove the market throughout 2006, creating a stronger end-of-year performance than in 2007. “Month by month, it was the construction recovery (worker) paying high rates driving the market, and that ended March 2007,” she said. “When they left, the gap wasn’t filled because the segment that hasn’t returned is the leisure traveler. While meeting and event planners get it finally, that the city is working, “which took a coordinated marketing effort among our state and area tourism leaders and politicians, the leisure traveler and many groups still have serious misperceptions of the condition of the city due to negative national press,” she says.

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