Hotels in the region were busy handling cancellations for guests who could not get to destinations in the Northeast, extending stays for guests who could not leave town, and booking rooms for people who left their homes.

Airlines started cancelling flights in the U.S. Northeast region Sunday evening as cities from Washington D.C. to Boston braced for floods and high winds from the hurricane, which was expected to make landfall in the next few days.

According to Flightaware.com, more than 7,100 flights had been cancelled by 9 p.m. on Sunday due to Sandy. Airlines waived fees for people who have to change travel plans because of the grounded flights.

In New York City, the timing of flight cancellations like US Airways (LCC.N), was determined by the city's decision to start shutting down its mass transit systems at 7 p.m. as passengers would have no way to get to and from the airport.

U.S. Airways said it would likely have to cancel close to 2,000 flights because of the storm, starting at 7 p.m. Sunday. The airline said it expects to resume flights on Tuesday, but noted that flooding and the storm's duration could cause additional delays.

The airline also said it would move planes from the hurricane zone to try to avoid damage. Repositioning those planes after the weather clears could cause additional delays.

Transportation consultant George Hamlin estimated that Sandy could cost the industry hundreds of millions of dollars.

"It's a disruption in terms of extra costs," Hamlin said.

On top of lost flight revenue, airlines will likely have to pay their crew extra if they are stranded away from their home base.

"If you cancel a day or two's flights, it may take some people days to get to where they want to go," he said.

American Airlines (AAMRQ.PK) said it would stop its Northeast flights at 9 p.m. Sunday night. This involved 140 cancellations Sunday and pre-cancellation of another 1,431 flights from Monday to Wednesday.

JetBlue Airways Corp (JBLU.O) said it cancelled more than a 1,000 flights through Wednesday morning. Delta Airlines Inc (DAL.N) said it cancelled 180 flights Sunday and that it expects cancelled flights Monday to be in the hundreds.

Reuters was not able to obtain estimates for flight cancellations for United Continental Holdings Inc (UAL.N).

Meanwhile the reservation desks at Starwood Hotels & Resorts Worldwide Inc (HOT.N), which operates hotels such as Westin, Sheraton and Marriott International Inc (MAR.N) hotel groups said they had a busy day.

"I've had a lot of calls about New York properties today, a lot of people who are cancelling, a lot of people who come here because we have generators," a Starwood reservations employee said.

"People are really just frightened of the storm ... they're frightened of water levels and they're frightened of losing power and they want to be somewhere where they're safe," the employee said.

A reservations worker for Marriott said her work day had been "really crazy" with all the calls for cancellations and last-minute reservations, including calls from corporations booking blocks of rooms for their employees.

Corporate spokespeople for Starwood and Marriott were not immediately available for comment Sunday. (Additional reporting by Karen Jacobs in Atlanta, Caroline Humer and Michael Erman in New York)

• A Permanent Economic Emergency