At the end of the fourth quarter of 2000 a total of 1,591 projects and 222,871 rooms were in the active pipeline nationally as compared with a total of 1,911 projects and 284,371 rooms at the end of the third quarter of last year. In contrast, according to Peter Glucker, director of marketing communications for the firm, "Boston is a different story."
Glucker tells GlobeSt.com that from 1998 to 1999 supply exceeded demand in the Boston Metropolitan Statistical Area, which is similar to the government's definition of the MSA. By the end of the fourth quarter of 2000, demand growth was 9.2% while supply growth was 4%. "Demand outgrew performance by 5.2%," notes Glucker. "That was the fourth best performance in the top 25 markets."
As Glucker points out, even more impressive is this area's construction trend. The current hotel census at the end of 2000 was 260 hotels with 42,115 rooms. The number of guestrooms under construction and in the permitting process in this area was 16.2% of that hotel census of 42,115 rooms. "This construction trend is the highest within the top 25 markets," he says.
This area has 16 hotels under construction and 18 in the permitting process. There are now 2,491 rooms under construction here and 4,341 rooms in the permitting process, which makes 6,832 rooms in the active development pipeline here and 4,199 rooms in the early planning stages. Of those rooms, 2,206 are slated for completion in 2001.
In addition, there are 24 hotels here that are in the early permitting stage. However, these numbers can be misleading. Up to 60% of hotels in the early permitting stage don't get built, says Glucker, who adds that 25% of hotels already in the permitting stage aren't put up.
Indications of an upcoming softening in the hotel market here are evident to Glucker who notes that while 12 hotels opened here in 2000, 15 are expected to open in 2001. "Subtle changes will soften a market," he says. "The introduction of a large number of rooms will impact everyone else. We think Boston will experience a softening in occupancy for 2001. But it should trend upward in 2002 because there will be a slowdown in new supply."
Also, notes Glucker, this area has the traditional generators for rooms such as low unemployment, sports teams and high tourism rates. "The number of visitors to this area grew by 8.2% last year," he says.
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