Demand growth continues to outpace supply growth in the U.S. hotel market, leaving travel buyers in greater need of last-room availability and suppliers more likely to place higher premiums - or even limitations - on LRA agreements. With lodging supply meeting further pressure from hurricanes, condo conversions and a construction pipeline that has slowed to a trickle, the past decade witnessed a rash of consolidation and acquisition—placing larger swaths of hotel inventory in fewer hands.

"Availability is definitely an issue this year," said Eclipse Advisors director of hotel procurement Ruth Philpott. "Occupancies are much higher and they're forecasted to be much higher at year's end than they have in the recent past."

Hotels in the past have been willing to offer LRA to preferred clients at no extra charge, yet for 2005 they sought a premium. The attitude shift continues for next year as hoteliers adamantly define last-room availability by room type, rather than run of house as some buyers were able to negotiate during the past few years.

"There comes a point in the cycle when availability is more important than price," said Christie Hicks, Starwood Hotels & Resorts senior vice president of worldwide sales. The supply and demand dynamic is creating such a point.

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