Major contributors to this contraction are the decline in US economic performance, increased cost of construction, worries about lower capital spending by business, record levels of consumer debt and tighter lending standards. Lodging Econometrics welcomes the slowdown as a boon for the hotel industry overall because it will leave guestroom demand and pricing as the primary variables over the next three years. The firm expects this to translate into higher room occupancies and better RevPAR potential.

Publicly traded lodging REITs are expected to be one of the beneficiaries of this downtrend, while franchise and management firms may suffer at the outset because their earnings come from new contracts and unit growth, but are forecast to recover quickly.

As in the past, Marriott has the most product in the active pipeline (properties under construction and in permitting) with 56,460 rooms, followed by Hilton (33,361) and Bass Hotels and Resorts (19,051). The top 10 firms accounted for more than 213,200 non-casino rooms, or 77.2% of the market.