Hospitality industry puzzles over market's surprisingly good health.

The hospitality industry is recovering from the economic recession and the aftermath of the terror attacks sooner than expected.

But it's current good health puzzles industry experts to such an extent that they are not certain what's in store for the future.

Speaking at New York University's 26th International Hospitality Industry Investment Conference, Douglas G. Geoga, president of the Hyatt Hotels Corporation, expressed his surprise at the rapidly rising occupancy levels in U.S. hotels.

"We are seeing dramatic rate movement in the most important markets: New York, Chicago, Los Angeles ... And we were planning on a very slow build-up in occupancy. It's strange," he said. "I am sufficiently surprised about the strength of the recovery that I am glad I don't have to give guidance."

However, Geoga and his colleagues worry that the rising cost of fuel might prevent many Americans from traveling this summer.

"Business is very good for the airlines right now," said Jonathan M. Tisch, chairman and chief executive officer of Loews Hotels.

"An issue that concerns me is the cost of fuel. If the consumer is faced with the decision of whether to drive to work or take the family on vacation, I worry [the choice will be to stay at home]."

"Utility prices is one of those areas we can't influence easily," agreed Geoga.

"The industry has been suffering tremendously because of it."

At the same time, Lalia Rach, associate dean of NYU's Tisch Center for Hospitality, Tourism and Sports Management, believes even higher costs of travelling won't prevent most people from going on a long-planned vacation. "The affluent market is extraordinarily hungry for new experiences," she said. "You'll see a lot of airport delays this summer [because of the volume of customers.]"

One of the things Rach does worry about is competition to luxury hotels from online travel sites, which offer easier booking options and sales discounts including travel and lodging packages.

"Let's face it, baby boomers [a customer segment most likely to use luxury hotels], are less likely to be electronically advanced," she said.

"It's generation X and Y--they are going to be driving the revenues."

"Our marketing strategy needs to be focused on the consumers. Through the Internet, they have already learned about competitive shopping and buying what they want," said James A. Rasulo, president of Walt Disney Parks and Resorts.

"We need to provide them with what they want and use the Internet to give them access to our services. If we keep our focus on evolving consumer tastes, we will wind up in a place that is fair and equitable to both us and the consumers."