"I think the higher end companies are a safer place [for investors] to be and ......the ones with a fee-based models, and international exposure, are better places relative to the owner-operators [companies], such as the hotel REITS," said Woronka.
This means firms like Marriott and Starwood, who earn top line management fees, while owners get their cuts from the bottom line.
Still, Lehman Brothers is "more cautious than optimistic and continues to forecast below guidance" revenue projections for Marriott, whose stock has fallen from $43 last June to about$36 today.
At the same time Lehman said it was raising revenue projections for Starwood "mainly due to the firm's international exposure."
Three leading hotel REITs, FelCor Lodging Trust, Strategic Hotels & Resorts, and DiamondRock Hospitality have underperformed the S&P this year--all are down 10% so far this year.
Others offer a more upbeat assessment of the US market. "It's not quite as terrible as Wall Street makes it out," says Jan Frietag, vice president global development for Tennessee-based Smith Travel Research.
He suggests the gloom cast by Wall Street's credit woes has led to a "disconnect between Wall Street and the Main Street operators."
At the same Freitag is concerned the industry's may be tempted to cut room rates to buoy occupancy rates, as it did, to little effect, after 9/11; full recovery still took two years.
"The theory of cutting rate-induced demand did not work out and we hope that a lot of people learned their lesson and this time around they are not going to randomly slash rates across the board but are going to be very, very careful with yield management," he said.
There are other obscured dangers investors should be wary of. Business travel can be turned off like a switch.
Big box firms, such as Westin, are highly dependent on large group bookings. So far these have been holding up but this strength could soon prove illusory.
Steep cancellation fees are a strong disincentive for backing out altogether but increasingly firms are sending smaller groups, just enough to get their already committed money's worth, notes Woronka.
On Thursday Gaylord Entertainment, which is highly dependent on groups at its convention hotels, reported a net loss of $7.3 million, or 18 cents a share, compared with a profit of $3.5 million a year earlier. But the real test, say analysts, will be in future bookings, which are typically made 2.5 years in advance.
How long will the pain for the industry last? “If you look ahead on this we can only speculate but we don’t think this is going to change overnight, " Caborn. "It’s like the rest of the economy, the road to recovery is going to take awhile until people have more money to travel.”
Another looming concern for next year is airlines cutting capacity; 40 percent of hotel stays are tied to flights.