Occupancy increased in Boston-area hotels in October for the third month this year, showing signs of a market recovery, according to Boston-based PKF Consulting’s recent trend report.

Overall market occupancy also increased in Cambridge in October, the report found.

A decline in Revenue Per Available Room (RevPAR) in Boston-area hotels was "mild" in October compared to the previous month, dropping 6.4 percent, PKF reported.

While demand is expected to continue to increase, PKF predicts hotels will have to deeply discount rates to attract the demand.

"Things are starting to look ‘better,’ however we are still expecting a gradual climb out of the abyss," said Reed Woodworth, vice president at PKF Consulting.