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[Excerpt] The sensitivity of hotel revenues to changing conditions in national and local market economies represents an endemic, systematic risk of hotel investing that is not easily managed. Moreover, twice during the last dozen years a catastrophic event has occurred coincidentally with a recession (i.e., Gulf War during the 1990-1991 recession and terrorist attacks of September 11, 2001 during the 2001-? recession). Various Wall Street analyst reports (e.g., Ader, 2001) and industry publications (e.g., Wood, 2002) document the severity of revenue decline experienced by hotels from the combined effects of recession and unprecedented terrorist acts. Recently, room revenues have shown signs of recovery, albeit very slowly, in most areas of the United States. The Hotel Outlook forecasts indicate an even stronger recovery of occupancy during late 2002 and early 2003.


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