Cancellations and postponements remain at an elevated rate, particularly for larger projects and those without a brand, the company says. Fifty-four percent of projects cancelled or postponed in Q4 are larger than 250 rooms, with five cancelled projects having 600 rooms or more. And more than half of Q4's cancellations/postponements have no brand affiliation, the company reports.

Approximately 73 hotels with 20,475 rooms opened in 2009. With 51% of total pipeline projects and 55% of rooms now under construction, new openings are expected to ramp up through 2011, causing new supply to grow at an increasing rate. The company forecasts 90 new hotels/24,508 rooms to open in 2010, then 104 hotels/30,553 rooms are projected to enter as new supply in 2011. Thereafter, "new hotel openings will begin to taper off as a result of the shrinking pipeline."

Europe

At the end of Q4, Europe's Pipeline is at 746 projects/128,113 rooms. According to Lodging Econometrics, this is the sixth straight quarter of declines, with project totals having fallen 27% and rooms by 26% from the pipeline's peak in Q2 2008. Roughly 357 projects/65,296 rooms are currently under construction, representing 48% of total projects and 51% of rooms. "These high percentages are indicative of a rapidly decreasing pipeline."

According to the company, the lack of available financing continues to impact both the rate of project migration up the pipeline towards construction and the flow of NPAs into the pipe¬line. "Both construction starts and NPAs remain in a low channel in Q4 and will stay that way, as the availability of lending is not expected to change in the near future." Projects that are able to obtain financing are mostly smaller-sized, the company says. Construction starts for the quarter average just 160 rooms, and 85% of construction starts and 89% of NPAs have already selected a brand, as the marketing and operating benefits of a brand are increasingly compelling to developers and lenders, the company reports.

The company forecasts new hotel openings to remain historically high in 2010 with 200 hotels/32,908 rooms coming online. In 2011, the company projects that new openings will decrease to 153 hotels/26,581 rooms, reflecting the ongoing contraction of total pipeline counts. "This downward trend will continue going forward as pipeline totals decrease further."

Africa

Totaling 176 projects/33,524 rooms at the end of Q4, project counts in Africa are off by 2% and rooms by 9% from the pipeline peak, says Lodging Econometrics. "They are the smallest pipeline percentage declines of any region in the world." However, the same directional trends impacting the Middle East are apparent in Africa as well, the company says. "NPA's are at cyclical lows and project cancellations and postponements continue to run high."

The company notes that the pipeline began to unfold in earnest as new openings in 2009 and that new openings are expected to be at historic highs through 2010 and 2011. Working together, according to Lodging Econometrics, "these metrics indicate that total pipeline counts will decline further into mid-decade, bringing this development cycle to a close."

US

If you look at the national numbers in the pipeline, they are quite a bit higher. According to the STR/TWR/Dodge Construction Pipeline Report, the total active US hotel development pipeline includes 3,551 projects comprising 368,740 rooms. This represents a 35.9% decrease in the number of rooms in the total active pipeline compared to February 2009. The total active pipeline data includes projects in the in construction, final planning and planning stages, but does not include projects in the pre-planning stage.

"We're seeing comparable declines in room development across all regions of the country," says Duane Vinson, vice president at STR, in a prepared statement. "The Mountain Region has posted the sharpest year-over-year decline due to a 75% (16,000-room) decline in the Las Vegas pipeline."