Despite hotel building boom, no break in rates seen.

Although a building boom in the U.S. hotel industry will add a whopping 127,500 new hotel rooms in 1997 and result in a drop in U.S. hotel occupancy from 64.6 percent this year to 63.1 percent by the year 2000, travelers are unlikely to experience relief from rapidly rising average daily hotel room rates, forecast to increase to $78.47 in 1998 and $82.59 in 1999 from $74.29 this year, according to the Lodging Research Network (www.lodgingresearch.com), the comprehensive Internet-based resource for lodging industry data and information from Coopers & Lybrand L.L.P.

"Hotel room construction starts in 1997 will rise another 16 percent from 1996 levels, and will be 53.6 percent above America's 25-year average of 83,000 new rooms per year," said Bjorn Hanson, Ph.D., New York-based chairman of the Coopers & Lybrand lodging and gaming group, creators of the Lodging Research Network. "That means approximately 1,250 new hotels will open in 1997, the most ever in a single year, contributing to the first decline in U.S. hotel occupancy rates since 1991."

Healthy Demand Will Boost Rates

Relatively healthy demand for hotel rooms and declining but still healthy occupancies will keep average daily room rates high, the Lodging Research Network reports. Room demand - as measured by average daily rooms sold - will rise 2.3 percent in 1997 and 2.2 percent in 1998. That's sufficient for hoteliers to boost average daily room rates by 6.1 percent in 1997 and 5.6 percent in 1998, the Lodging Research Network reports.

"For travelers, the drop-off from peak hotel occupancy levels will be far too small to make finding a hotel room any easier in major U.S. cities," Hanson noted. "But increases in average daily room rates will be noticeable for travelers, especially in primary urban markets."

Healthy room rates and fairly consistent demand for rooms will propel the U.S. hotel industry toward another year of record profits, the Lodging Research Network projects. Profits will be $14.5 billion in 1997, a record, and will rise to $17.1 billion in 1998, the report says. Revenue per available room (RevPAR), an important industry gauge that takes into account both occupancy and average daily room rate, will increase 5.5 percent to $48.01 in 1997 and will rise 4.7 percent to $50.27 in 1998.

"America's hotel industry will experience record profits every year through 2000," Hanson said.