While 2005 is shaping up to be a record-breaking year for both hotel occupancy and average daily room rates in New York City, hotel analysts said the worst is yet to come for travel buyers. With demand up and little new supply on the horizon, analysts predicted that the next several years will bring even more sold-out dates and steadily increasing rates, particularly in midtown Manhattan.

The most recent figures from Smith Travel Research indicate that hotel occupancy in New York averaged 82.2 percent during the first seven months of 2005, a 3.9 percent increase from the same period in 2004. At the same time, average daily room rates rose to $191, an 11.7 percent increase during the first seven months of 2004.

For the month of July alone, New York hotels achieved 85.1 percent occupancy and average room rates of $187.38, an increase of 13.5 percent over room rates in July 2004.

"Occupancies in Manhattan will average close to 86 percent for all of 2005, which means there are lots of dates when hotels are sold out completely," said Kirk Reed, a consultant with the PricewaterhouseCoopers hospitality and leisure practice in New York. "Another trend we're seeing is that occupancy levels are flattening out over the year, with less difference according to season. Even traditionally slower months, such as July and August, are very busy."

Hotel analyst John Fox, senior vice president of PKF Consulting in New York, added that many business travelers will have to be extremely flexible in their choice of hotel during the peak fall season. "If you don't plan ahead, you're out of luck," he said. "People are going to have to be prepared to pay big rates and may have to trade up or trade down in terms of hotel types."

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