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April 7, 2003 – Impact of War on Lodging Industry

PricewaterhouseCoopers (PwC) estimates that declines in both leisure and business travel during the Iraq War will cause RevPAR to decline by 3.1 percent in the second quarter of 2003 after a flat first quarter, compared to 2002 levels. RevPAR is expected to increase by only 0.5 percent for full year 2003. The company also predicts that both RevPAR and lodging demand will increase by 3.0 percent from the previous year in the second half of 2003, this is on condition that the U.S. suffers no major or specific terrorist threats or attacks. Lodging demand is forecast to decline by 1.8 percent in the second quarter of 2003, compared to second quarter 2002. ADR is expected to improve by 0.4 percent in the first half and by 0.8 percent in the second half of 2003, leading to an overall increase of 0.6 percent in 2003 over 2002. This does not, however, compensate for the 1.0-percent decline in 2001 and the 1.6-percent decline in 2002. PwC have revised downward their initial forecast of $16.1 billion in profits for the lodging industry, to $15 billion in 2003, due to the impact of the Iraq War.

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