Hotel owners have been looking forward to July, when the Pan Am Games are expected to bring close to a quarter of a million visitors to Toronto. But CBC News has learned occupancy rates are falling short of the industry's expectations.

"July so far is looking very slow," said Sam Musstaq, manager of the Royal Oak Inn, on Dundas Street East.

Musstaq said advance bookings are at only 40 per cent of occupancy, down from 98 per cent last July.

He says he thinks people are wary of the expense and crowding during the Games, which run from July 10-26.

"They think because of the Games, the price will be higher and the city will be crowded," he said.

Terry Mundell, the head of the Greater Toronto Hotel Association, acknowledges that reservations are lower than expected. But he expects visitors will book closer to the games, noting that North Americans, in general, tend to book at the last minute.

"Part of it is the way tickets come out — what games are on, where they are, who's playing. Then they decide to book their hotel after that," said Mundell.

But Stanton Sing, marketing manager for The Sheraton Centre, said it might be time for a reality check.

"When the excitement gets the better of you, your expectations grow very, very high and reality sometimes has to kick back in — that it's not going to be the whole world that floods Toronto," Sing said.