Hotel Pipeline Continues Downward Spiral

PORTSMOUTH, NH-If bad news comes in threes, then the lodging sector is really pushing the envelope. According to hotel industry analyst firm Lodging Econometrics, the ’02 hotel development pipeline declined for the fourth straight year. What’s more, the pipeline will continue its downward spiral for the next two or three quarters, guaranteeing new openings will fall well below 2% in the next three years.

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.