Faculty & Research
Hotel Values in the Aftermath of September 11, 2001
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Vol 42 No 6
By: John W. O'Neill and Anne R. Lloyd-Jones
Executive Summary: Although all facets of US society have been affected by the September 11 attacks, it is hard to cite an industry that has felt those effects more immediately than the hospitality industry. The airlines, for instance reported a 32% drop in passenger traffic in September. With the sudden drop in air traffic, many hotels saw their customer base evaporate. Even before September 11, many hotels and markets were experiencing a softening of occupancy and ADR as the economy slid into recession. Most economists seem to agree that a recovery will be well underway by the end of 2002. Given those expectations, we anticipate an increase in hotels' net income levels by mid 2002. It is worth noting that during the previous recession, the decreases in value coincided with declines in average hotel occupancy. Moreover, the only other decrease in the HVI during this period also coincided with an occupancy decrease. In 1998 occupancy fell by 1.2%, and the HVI decreased by 0.4%. In general, we expect the same pattern of decline, stability, and growth to emerge in the US hotel market in conjunction with the current recession. However, we do not expect the decrease in hotel values to be as dramatic as was seen in 1991.
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- Hotel Values in the Aftermath of September 11, 2001 By: John W. O'Neill and Anne R. Lloyd-Jones
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