Travel and tourism will be among the hardest hit sectors as a result of last week's attack on the World Trade Center, according to Bear Stearns, the US investment bank.

"The economic disruption and the psychological scars will take much longer to heal and we believe it will be some time before travel volume approaches anything close to 'normal levels'," said Jason Ader, gaming, lodging and leisure analyst at Bear Stearns.

The similarity between current events and the 1990 Gulf war, which plunged the travel and hotels sector into a prolonged slump, gave grounds for pessimism reflected in last week's sharp falls in leisure stocks. However, some analysts said one point in the sector's favour this time was that many hotel companies were less highly geared than last time.

The US market remained closed last week but in Europe hotel and travel companies were among those worst affected. Shares in France's Accor, Europe's largest hotelier, were down 29 per cent on Monday's close - before Tuesday's attack - and Friday's close. Germany's Preussag, Europe's largest tour operator, was 24 per cent lower over the same period.

In the UK, shares in Hilton Group were also down 24 per cent despite having no hotel operations in the US, where the Hilton network is operated by California-based Hilton Hotels Corporation.

"In the Gulf war nobody flew. At the moment the situation isn't like that because there isn't a war. If there is no war, things will get back to normal," said David Michels, chief executive of Hilton Group, in the US, where he was stranded last week.

The cruise industry looked especially vulnerable to the expected downturn in travel, given the large increase in supply which has already dampened the sector. Shares in P&O Princess, the world's third largest cruise line, fell 36 per cent last week. Most people fly to their cruises and a reluctance to travel would depress the industry.

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