The US hotel market is looking up, but shouldn't expect a significant rebound until 2004.

That's according to the newspaper USA Today, which has had a sneak preview of the Ernst & Young Lodging Outlook, which is due out today.

In its outlook, Ernst & Young predicts a 2% increase in the daily rate for US hotels, bringing room rates in line with what they were in 2000. It also says that average occupancy rates and revenue per room should top 2002 levels, but remain below the levels reached in 2000.

Rates are projected to rise in 17 of the top 23 lodging markets and drop in three: Salt Lake City, New Orleans and Philadelphia, which has fewer conventions scheduled this year.

It is predicted that the biggest rate rise will be in cities such as New York, Boston, San Francisco and Los Angeles, with Orlando seeing the biggest rise of nearly 5%. Although rates in hotels in New York and San Francisco may never reach what they were in 2000, analysts believe this is more to do with the fact they were too high then.

Chase Burritt, Ernst & Young's national lodging director says that last year was the worst in 20 years for hotels in the US and that operators were forced to slash prices and costs to withstand the poor demand.

According to a study by Pricewaterhouse Coopers, Approximately 60% of hotels relinquished staff or cut shifts last year. Guests would have noticed a difference too, as operational hours of food and beverage outlets, room service, gyms and business centres were cut.

A rebound in 2004, is dependent on a hoped-for resolution of war and a new outlook on travel spending.