- The Washington Times - Monday, November 5, 2001

Place LaSalle Hotel Properties is on the list of companies that have been slammed since the September 11 terrorist attacks.

Victimized by a big decline in travel, the Bethesda retail trust, owner of 17 luxury and upscale hotels across the country, has seen its stock price slide in the last two months. Last week, after announcing shaky third-quarter results, company's shares fell to a 52-week low.

Shares of LaSalle Hotel Properties closed Friday at $8.50 on the New York Stock Exchange. They had fallen as low as $6.89 per share last Tuesday. Shares have fallen more than 50 percent since the attacks.

Like most hotel companies, LaSalle has seen declining occupancy rates since September 11. In its quarterly report released last Monday, the company reported occupancy rates of 68 percent in its hotels for the three months ending Sept. 30. That's a decline of 11 percent since last year.

"[Revenue per available room] declined substantially during the third quarter due to deepening economic weakness and the unprecedented drop in travel following the tragic events of September 11," says John Bortz, LaSalle's chairman and chief executive. "This dramatic curtailment in travel exacerbated pressures on an already weakened industry."

LaSalle reported that revenue per available room slid from $119.38 to $102.21. The company pulled in $3.9 million ($.21/share), compared with $7.7 million ($.45/share) during the same quarter last year.

Analysts say companies that own or operate luxury and upscale hotels have been particularly susceptible to the downturn in travel.

"It's pretty clear that the lower-end, highway-oriented hotels are doing better," says Paul Puryear, a hotel analyst with Raymond James. The reason, analysts say, is because smaller hotels are more often located in "drive-into" zones, as opposed to resorts and business hotels located near airports and "fly-into" zones.

But analysts have been careful not to generalize about LaSalle. The company does have several "drive-into" resort spots, including San Diego and Key West, Fla., that may fare well over time, analysts say.

And despite all the "doom and gloom" surrounding the travel industry, many analysts remain upbeat about LaSalle's stock, and recommend it to more gutsy investors.

"We like the value for the investors who are willing to take a little more risk," Mr. Puryear says. "If you look at the long run, given the price, there's a tremendous upside."

He and Raymond James colleague William Crow rate LaSalle's stock a "buy."

Analysts say the hotel sector will rebound eventually. And with new construction of hotels at a virtual standstill, existing hotels will see their occupancy rates increase over time. But the near-term future for the industry is cloudy, analysts say. LaSalle executives acknowledge as much.

"The events since September 11 and the resulting effects are expected to continue to have a significant negative impact on travel and lodging demand for the immediate future," says Mr. Bortz, who has spearheaded a cost-saving campaign throughout the company's hotels.


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