PKF's forecast of 275,000 new hotel rooms opening through 2009 echoes a similar report released in August by Portsmouth, NH-based Lodging Econometrics, which states that roughly 300,000 new rooms will be added to the national landscape. The decline is largely being blamed on the ongoing credit crisis, which had yet to deepen when hotels that are opening now got started.

"The current credit crisis may be unfairly punishing developers with sound market and financially justified projects. However, the lodging industry will eventually benefit from the near-term development difficulties," Woodworth says. He projects supply growth of less than 2% in 2010 and 2011, allowing sufficient time for demand to catch up to the supply opening in previous years.

The worsening travel outlook, aggravated somewhat by the ongoing economic crisis and the inability of Congress to pass the $700-billion financial market bailout, is taking its toll on hotel stocks. Wall Street analysts downgraded several issues over the past week, pointing to further contraction of corporate travel spending that will result in reduced revenue per available room, or RevPAR.

"Capital market turmoil is undermining asset values, a situation last seen in the late 1980s and early 1990s," Woodworth concludes in the PKF Hospitality report. "The projected industry slowdown won't be as deep as the ones observed in 1981 or 1991, but it may take a little longer to fully recover."