If the credit crunch had been avoided somehow, he continues, there would be much greater systematic problems in hotel performance. "Now, assuming a moderate recession and rapid recovery, 2010-2011 will be strong years for hotel performance," Peek says. Conversely, though, if the recession is a protracted one, all bets are off.

Kimpton's Depatie provides anecdotal back-up to Peek's analysis, although Depatie has a more benign view of the supply-demand balance for the industry in mid-term. "We have 19 hotels in our pipeline, 10 of which are already financed," he says. "Of the nine that are not, I know some won't be financed and others will be delayed."

Depatie says what is happening now is merely a mid-cycle correction – especially when stacked up against the hotel industry's most recent crises: the Sept. 11, 2001 crisis and, before that, the first Gulf War. Still, though, that perspective does not help hotel developers as they seek out financing today, Depatie says. For its latest fund, "we are requiring higher unlevered returns to make our equity returns because debt is more expensive." Debt for certain projects, he says, is simply too expensive. "Value-add plays, for example, are much more costly to finance."

There are a few bright spots, though, for developers seeking hotel financing now, says Ed Blum, managing director for Washington, DC-based Molinaro Koger Capital Markets. "Hotels under $25 million will find financing still reasonable. Also, we are seeing a return to club deals with banks, that formerly would have competed for a deal, banding together to finance it."

The bad news is that Blum is seeing more banks demand recourse – an unheard of request a year ago. Supply is being impacted, he agrees, especially on deals more than $50 million. "Once this credit cycle comes to an end we will see a pick-up in financing, especially as the fundamentals will be so good." The big question, of course, is exactly when this current cycle will play out, he says.