Hotel openings in 2010 will drop 56 percent from last year, according to a new report from Lodging Econometrics (LE). The research firm predicts that 717 hotels, representing 82,620 rooms, will debut this year. In 2009, 1,301 hotels/146,929 rooms came online. LE attributes the decline to skittish lenders—particularly local community banks—unwilling to provide the necessary capital.
Forward migration of pipeline projects toward construction—known as construction starts—stood at 119 projects/11,600 rooms in Q4 2009, the lowest totals since early 2002. Cancellations and postponements remained high; 160 projects in 2008 and the 190 projects/34,362 rooms in 2009 were already in the ground and ceased construction. Furthermore, as of Q4 2009, new project announcements have fallen to a five-year low, with 308 projects/33,422 rooms.
But the news isn’t all bad. "The declines in the pipeline and in LE’s Forecast for New Hotel Openings means that the absorption of new supply will be far less of a head wind for the industry as it awaits the recovery of demand and for its pricing power to return," the company says in a statement.
