Hotel financing experts agree with Ford that lending restrictions will reduce the flow of development or even cancellation of projects, especially in cities where new rooms aren't a pressing need. "Whatever is on the books to be developed, a lot of those deals are going to fall to the wayside," says Scott Stephens, principal with Hospitality Real Estate Counselors in Tampa, FL.

But while hotel developers are dependent upon banks for financing, banks in turn need solid development projects to keep money turning within communities, Ford explains. Regional and community banks have been the key drivers behind smaller and more abundant hotel projects, with 100 to 200 rooms each, accounting for 44% of the total pipeline, he says.

However, balance-sheet troubles began to surface among those banks in the second quarter, further thinning the availability of financing, he says. Highly credentialed investor groups with exceptional hotel projects, that can invest larger equity in their projects, can still secure financing, but Ford contends that those developers won't proceed unless they have a leverage position well under the dollar-for-dollar equity some lenders now demand.

Cutbacks in spending on corporate travel and off-site meetings are creating a leveling off in demand for new hotels that Ford believes would not have occurred otherwise. Other countries are now mirroring the American slowdown, being affected by a falloff in inbound tourism from overseas, he says.

How much of a slowdown will occur in years to come is difficult to predict. Ford suggests that franchise agreements for new hotels to start in the next 12 months will likely be extended as developers await resolution to the lending crisis, he says, adding that even a zero-growth pattern would still be seen as favorable.

Lodging Econometrics Q2 pipeline report forecasts a total of 1,218 hotels totaling 135,373 rooms opening in 2008, a gross growth rate of 2.9%, with 1,508 hotels with 165,425 rooms opening in 2009, representing 3.4% growth. The net change for new supply will likely be half a percentage point or less, the report stated. "We're in one of the most unusual periods that we as adults have ever been in," Ford says. "All the banks are closed."