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Hotel room rates rising in 2005

Since 9/11, U.S. hotel room rates have been in a downward slide. Until now. According to recent research from PKF Hospitality Research, Atlanta, and Torto Wheaton Research, Boston, rates now are not just on the way up, they're way up.

While rates slipped 6.4 percent from 2000 to 2003, the top 50 hotel markets researched in the study went up 3.7 percent in 2004 and are expected to rise another 4.7 percent in 2005 due to both stronger demand and the use of more effective hotel price-setting strategies.

New York is anticipating a 13.7 percent rate bump in 2005, the largest increase of any city in the United States. PKF Hospitality Research executive managing director R. Mark Woodworth credits the greater-than-80-percent occupancy levels in 2004--which are expected to go to 84 percent in 2005--for pushing the city toward the fastest rising rates. The other top five average-daily-rate-growth cities are Phoenix, at 8 percent; Tampa, Fla., at 8 percent; Los Angeles, at 7.7 percent; and West Palm Beach, Fla., at 7.4 percent.

Other areas are still waiting for demand to catch up with supply and allow for price increases. On the flip side of the trend are Houston; Kansas City, Mo.; Columbus, Ohio; and Long Island, New York, all of which are expected to have their ADRs drop slightly in 2005, according to the study.

The most expensive cities in 2005 are expected to be New York ($236.97), Honolulu ($143.36), and Boston ($132.86), compared to the top-50 average of $102.44. But there are still bargains to be had next year in the lowest ADR-rate cities of Dayton, Ohio ($64.15); Albuquerque, N.M. ($66.26); Charlotte, N.C. ($67.28); Raleigh, N.C. ($70.11); and Memphis, Tenn. ($71.22). And, of course, there are bargains to be had even in the high-ADR cities, especially in off- and shoulder seasons.

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