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KEVIN SMITH, the general manager of the sprawling New Yorker Hotel near Pennsylvania Station, got a jolt last month that reminded him of the weeks following Sept. 11, 2001.
When the Dow Jones industrial average plummeted 504 points on Sept. 15 - a reaction to the Lehman Brothers bankruptcy and the sale of Merrill Lynch - the hotel was immediately flooded with calls from people canceling their reservations. By the end of the day, the hotel had 17 more cancellations than bookings, a rare occurrence.
"That was a warning signal for us that we needed to make plans for a difficult time," says Mr. Smith.
The veteran hotelier has plenty of company. The carnage in the stock market over the past two weeks is rapidly showing up in hotel occupancy rates across the city. Nervous travelers, from foreign visitors to business executives and families, are scrapping trips to the Big Apple; and others are shying away from making long-term plans to come here. Hotels are struggling to fill rooms...