Hotel Construction Pipeline on the Decline, Report Says

Not surprisingly, the construction pipeline for hotels in the United States is on the decline. According to a new report released by Lodging Econometrics, the current pipeline in Q1 2009 stands at 4,918 projects/619,431 rooms, a 16 percent drop in projects and 21 percent drop in rooms when compared to the pipeline peak in Q2 2008.

Projects scheduled to start construction in the next 12 months are also dramatically declining. Compared to the Q2 2008 peak, properties under construction have dropped 23 percent by projects and 29 percent by rooms.

LE also predicts that new hotel openings will reach a cyclical peak in 2009 with about 1,414 hotels/161,689 rooms. So far, Q1 has seen 28 projects/5,276 rooms suspending construction, representing more than half the project count of all of 2008.

LE predicts that overall pipeline totals will decline into at least 2011. A downward revision in the forecast for new hotel openings may need to be done if credit availability doesn't improve soon, the report says.

You can read the report or order the full version online at Lodging Econometrics.
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