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Hotel Development Pipeline Drops to Lowest Point Since Early '90s

PORTSMOUTH, NH-A recent report by Lodging Econometrics, the locally based research division of National Hotel Realty, indicates that the pipeline for new hotel development has dropped to the lowest level since the early 1990s.

By Naomi Grossman | Updated on February 20, 2002

PORTSMOUTH, NH-The pipeline for new hotel development dropped to the lowest level since the early 1990s, according to Lodging Econometrics, the locally based research division of National Hotel Realty that analyzes market trends, development pipelines, the current hotel census and real estate values across the country.

There are currently 2,328 projects and 314,185 rooms in the total development pipeline–which is all hotels currently under construction, all those expected to start construction within the next 12 months, and all that are in early planning. These figures represent a 28% drop since January 2001. In the fourth quarter of last year, the net decline in the total pipeline was 263 hotels having 36,505 rooms. There were 209 hotels with 22,811 rooms that opened in the quarter, while 403 projects with 47,730 rooms were cancelled, put on hold or declared temporarily inactive by developers. Newly entering the pipeline during the quarter were 349 projects with 34,036 rooms, slightly less than the 354 new projects announced in the third quarter.

Of the 286 anticipated new openings for the fourth quarter, 125 projects, or 44%, were delayed until 2002. New openings for the entire year 2001, at 1,055 projects with 111,405 rooms were the lowest since 1995. Yet another indication of the decline, according to the report, is the total number of projects scheduled to start construction within 12 months–902 projects and 113,417 rooms–which is high compared to the number already under construction. This reflects a “bunch up of delayed projects as many developers are having difficulty securing financing.”

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