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Using data on 34,695 hotels from 2000–09, this study examines how the external shocks of the terrorist attacks on September 11, 2001, and the financial crisis of late 2008 affected aggregate occupancy, price (average daily rate), and revenue per available room (RevPAR) within the U.S. lodging industry. We found that the unexpected nature of these shocks did create fluctuations in occupancy and average daily rate, when controlling for the impact of other important hotel factors such as seasonality, segment, and hotel size, and for local economic factors. Although the industry was noticeably affected by the 2008 financial crisis, the impact of the 2001 attacks was both more negative and immediate in terms of drops in occupancy, ADR, and RevPAR. The isolated effects of the terrorist attacks were greatest immediately after the event, while the impact on hotel performance from the financial crisis worsened over time, with the most negative impact coming two months after the fall of Lehman Brothers. Exploring the differential impact of these shocks on various hotel segments revealed that higher-end hotels were more susceptible to their negative impact, but those hotels also made strong rebounds after four months. In contrast, limited-service midscale hotels were more negatively affected by the financial crisis than were midscale hotels that serve food and beverage. The reverse was true following the terrorist attacks.


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