New-Room Pipeline Starts to Shrink

Construction of new hotels nationwide has declined for the first time in five years and is likely to continue on that track into the next decade, according to various reports. Experts say declining future demand for rooms and tighter financing for larger projects are contributing to the fall-off.

“It’s a dead-center hit,” Patrick Ford, president of Portsmouth, NH-based Lodging Econometrics, tells GlobeSt.com. “The credit crisis and softening lodging operating statistics are having an adverse impact on developers’ thinking.”

As of the third quarter, Lodging Econometrics counts 5,652 projects totaling 740,272 rooms in its US hotel pipeline. The firm notes that construction starts were down for a second consecutive quarter and that many projects have slid back from scheduled starts over the next 12 months into “early planning” status.