LE's latest Guidance Memo reports that hotel development is down nearly 50% from its 1998 peak of 530,592 rooms and down more than 15% from 2001.
Fourth quarter 2002 saw the 12th consecutive quarterly decline in hotel development, marking 16 out of 18 quarters of negative growth. There were 260 new projects announced in Q4 and 132 completed projects. But 167 projects were cancelled or postponed during the same period and 50 under-development projects were slowed down as developers lengthened their timelines as war threats loom and the economy refuses to cooperate. All told, one out of every nine projects in last year's Q3 pipeline stalled or were postponed by as much as a year.
At a glance, LE shows a nearly 25% decline in rooms under construction for '02 and a 1.8% drop during fourth quarter, and 16.1% fewer starts in the next 12 months were reported last year with 8.5% fewer starts during the next year going on record during Q4.
Previous LE Guidance Memos accurately called the opening of 753 hotels with 86,488 rooms last year. This year, LE forecasts 71,000 new rooms. If the expected increase in demand for '03 pans out, a healthy growth trend will begin, lasting for at least three to four years.
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