Los Angeles, Mar. 24--Demand for U.S. hotel rooms would likely drop 5 percent -- more than previously expected -- if the war in Iraq ends quickly, according to an industry forecast issued shortly after the launch of a U.S.-led attack on Baghdad.
"Our new numbers reflect that February was already bad without the war -- it was the anticipation," said senior analyst Cristina Ampil at PricewaterhouseCoopers, the consultancy that made the forecast on Thursday.
The hotel industry has struggled since early 2001, when the effects of the dot-com bust and a weakening economy turned the tide after a record year in 2000.
After the Sept. 11, 2001, attacks, many hotels temporarily shut or reduced hours for services like restaurants. They plan to do the same if business travel slows during the war with Iraq.
That seems likely since about half of the 123 organizations surveyed by the Business Travel Coalition, a corporate advocacy group, said in a survey released Wednesday that they had tightened U.S. travel policy for employees in response to the war with Iraq.
Travel companies are also generally waiving cancellation fees during the war.
PWC forecasts that revenue per available room, a lodging industry statistic that measures occupancy and room rates, will drop 1.5 percent in the first half of 2003, compared with a forecast 1 percent increase without the war and 0.5 percent drop if the war had started earlier.
Based on scenarios from the Center for Strategic and International Studies, PWC said a brief war of 30 days to 45 days was the most likely scenario for an Iraq conflict.
During those four to six weeks, demand for rooms would drop 4.9 percent to 2.4 million rooms per night. The conflict would end just in time for vacationers to travel during the summer peak season.
Businesses would also take to the road and demand would rebound by 188,000 rooms and return to "normal" by the fourth quarter in such a scenario, it said.
"What is lost is lost," however, since the rebound would not be strong enough to make up for the six-week depression, said Ampil. For full 2003, revenue per available room would rise 0.5 percent, compared with a 2.1 percent rise if the war had never happened, she forecast.
The forecast does not account for economic changes, such as a tax cut, or the effects of possible attacks such as bombings or hijacking. Federal alerts and general fear of terrorism and war have already hit the industry hard, permanently dampening demand to the current baseline scenario, PWC has said.
Analysts have also calculated the effects of more protracted wars, forecasting that a conflict of 6 weeks to 12 weeks would lead to a 2003 decrease in revenue per available room of 0.1 percent.
A prolonged conflict of up to six months involving Israel could lead to a 3.6 percent decline this year, PWC said.
