The US Construction Pipeline totaled 5,358 projects/686,516 rooms at the end of Q4. This represents a 9% decline by projects and 13% by rooms from the cyclical peak in Q2 2008.
The Pipeline is declining at an accelerated pace, having lost nearly 100,000 rooms over the past 2 quarters. This downward trend is expected to continue through 2010.
With the realization that the nation's economic and banking crises are going to be deep and prolonged, consumer and business sentiment has dampened considerably. Guestroom demand has turned negative, resulting in significant declines in occupancy and RevPar, and putting considerable pressure on room rates. This is causing many developers to retreat to the sidelines to await a bottoming in economic conditions and a thaw in the lending environment.
As a result, project cancellations and postponements are at trend-line highs, while New Project Announcements are well below previous cyclical peaks.
New Openings in Q4 2008 exceeded expectations, with 367 hotels/43,845 guestrooms coming online, the highest quarterly total since Q2 1999. This brings 2008's total New Openings to 1,330 hotels/153,411 guestrooms, a gross growth rate of 3.2%. Of that total, new casino openings were 30 hotels/15,826 rooms, the highest count recorded since Q3 1998. New Construction projects are coming out of the Pipeline at an accelerating pace, as there is less pressure on the availability and cost of building materials and labor crews, leading developers to complete projects on schedule or even ahead of schedule.
To view the full Q4 US Pipeline Summary, , please click here.
Lodging Econometrics (LE) of Portsmouth, NH is the global authority for hotel real estate. LE conducts Supply Side research for all markets, developers and brands and companies in: U.S., Canada, Mexico, Central America and the Caribbean, Europe, Asia, Middle East, South America, and Africa.
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