It's not the horrific recollections of jumbo jets crashing into skyscrapers that are keeping Americans from boarding airplanes and booking hotel rooms as frequently as they did before Sept. 11. Economic uncertainty, plunging stock markets and shrinking corporate travel budgets are the main reasons cited for traveling less these days.

The "air travel stigma," the reduction in flying since 9/11 for psychological or emotional reasons that had an immediate knock-on effect on hotels, has largely disappeared, according to recent surveys. Indeed, the Travel Business Roundtable (TBR), an organization of top executives from the travel and tourism industries, found that 90 percent of Americans are traveling the same amount or more than before the terrorist attacks.

But that doesn't tell the whole story, especially when it comes to a slump in the hotel industry that could last well into 2004.

Frequent business travelers, who account for an inordinate share of the hotel industry's revenue because they tend to book more room nights, are making fewer trips, the TBR survey said. Seventeen percent of those polled reported traveling less now than a year ago - 5 percentage points higher than the overall population.

And the reason is primarily money - or the lack of it.

Almost half of the 700 business and leisure travelers surveyed by TBR cited economic factors as the reason they would avoid taking a trip, while 32 percent said budget considerations would be the prime reason keeping them from traveling more than 100 miles from home.

Feeling Secure

Safety, meanwhile, isn't nearly as big a concern as many had predicted. Eighty-nine percent of those questioned said they think airport security is better now than before 9/11, though business and leisure travelers have slightly different views on the new measures. Among frequent business travelers, 60 percent said they were sufficient compared with 74 percent of frequent leisure travelers.

"Though lower prices and increased security measures have helped get Americans traveling again, the ongoing economic uncertainty in the U.S. is a barrier to the industry's recovery," said Loews Hotels CEO Jonathan Tisch, who is also chairman of the TBR.

"With consumers seeing their savings significantly decreased or wiped out by the recent performance of the stock market or their 401k retirement plans, they are cutting back on discretionary spending, including travel," he continued. "Vacations are being shortened or canceled altogether. Likewise, businesses continue to cut back on non-essential travel, keeping their travel costs down as well."

The Hospitality Research Group (HRG), the Atlanta-based affiliate of PKF Consulting, similarly concluded that what's ailing the U.S. hotel industry is the weak economy rather than weak knees. "The most recent evidence places nearly all of the weight on economic conditions, rather than on the fear of flying, to explain the slow recovery of U.S. hotel markets," said HRG's Jack Corgel.

The HRG report found that virtually all of the "air travel stigma" effect had dissipated in 40 of the 53 markets it studied. And in the remaining 13 locations - including important hotel markets such as New York, Washington, D.C. and Boston - the reduction in lodging demand because of fears over air travel had declined significantly.

By the end of the year, only a few markets that are highly dependent on fly-in business will experience any stigma effect at all, HRG predicted. Those markets include Atlanta, Boston, Dallas, New York, San Francisco, Tampa and Washington.

But the flagging economy will remain a problem for hotels throughout the country.

Delayed Recovery

PricewaterhouseCoopers doesn't expect a recovery in the U.S. hotel industry until 2004 because of the combination of a sluggish economy, steep stock market declines, the failure of business travel to rebound as expected and concern over possible U.S. military action against Iraq.

The New York-based consulting group predicts it will take until the fourth quarter of 2004 for revenue per available room (RevPAR), adjusted for inflation, to reach 1996 levels. In its latest forecast, the group predicted RevPAR would decline 2.3 percent this year, more than the previous estimate of 0.7 percent. That key indicator is expected to rise only 3.5 percent next year, instead of a previously forecast 5 percent, and a more robust 5.6 percent in 2004.

PricewaterhouseCoopers said U.S. hotels have become more dependent on leisure travelers, who tend to reserve trips with shorter lead times, forcing properties to discount rates to fill rooms. That creates a vicious cycle for hotels because consumers continue to postpone reservations, knowing that rates will come down.

"Until the confluence of these recent forces on the economy and the lodging sector, this current outlook for lodging had not been warranted," Bjorn Hanson, chairman of PricewaterhouseCoopers' lodging practice, said in explaining the change in the group's forecast.

Not everyone, however, is as bearish. Boston-based Torto Wheaton Research (TWR) was encouraged by the slower decline in RevPAR at chain-affiliated hotels in the second quarter.

TWR says the second-quarter decline in RevPAR was not demand related. Rather, it was due to a 4.2 decrease in the average daily rate and a 2.2 percentage point reduction in the occupancy rate, triggered by a 2.9 percent increase in the supply of available rooms.

"Recent data suggest that the national hotel market is right on course for a turnaround in the third quarter of this year," TWR reported. "Despite indications of slowing GDP growth and the lack of any clearly visible signs of resumption of job growth, it is widely believed that the economy will continue to grow, albeit at a slower rate than previously expected. Even under such a scenario, it is very likely that the national hotel market will register a positive year-over-year RevPAR growth in the third quarter."