PKF Consulting has released a mixed bag of projections for U.S hotels next year, with room rates performing well across the nation but occupancy rates varying from market to market.

According to the international hospitality firm's annual "State of the Hotel Industry" report, occupancy rates will remain at 73.9 percent for both 1997 and 1998 for the 42 cities surveyed. Occupancy rates for 11 of those cities are projected to improve in 1998. Occupancy is expected to decline in 18 cities and to stay flat in 13 cities.

In contrast, room rates are expected to have increased by 7.2 percent this year over 1996, with another 5.8 percent increase projected for 1998. The increased use of revenue and yield management systems has helped hotels raise rates despite greater competition from new hotel development, says John Fox, senior vice president of PKF Consulting in New York.

"Even though new hotels are being built in several markets, it is still difficult for travelers to book a room during the peak business days of the week or heavy vacation and convention seasons," says Fox. "Yield management systems allow hotels to measure the demand for hotels and maximize the rates when the rooms are most wanted." The average room rate in New York City, meanwhile, is expected to hit $200 by year-end 1998, the first market in the nation to do so.

A by-product of the higher room rates is the double-digit growth of hotel operating profits, Fox adds. "Hotel revenues are growing at 1.6 times the growth of expenses. This has led to the highest operating profit margins in 30 years."