More hotel rooms came online in 2008 than in any other year in history: 154,667 rooms in 1,345 new hotels. And as bad as 2009 was, economically speaking, there was still a lot of unfinished work in the pipeline, so yet another 146,929 rooms were added in 1,301 new hotels.
Lodging Econometrics is forecasting 82,620 new rooms in 717 newbuilds this year, a drop of 44%. Projects under construction are at a four-year low, new project announcements are at a five-year low, and cancellations and postponements are at a historical high.
The 2011 forecast calls for further decline in growth, to 638 new hotels comprising 63,624 rooms.
Although U.S. hospitality is in the pits, the global picture is not as dim. Overseas, there's significant activity in some regions, particular in Asia. And, longer term, the outlook is good. As Starwood CEO Frits van Paasschen pointed out in a Travel Weekly interview recently, in the 30 years before 9/11, growth and demand grew in tandem, but since then, despite the record-breaking year in 2008, growth actually fell behind demand. Once the lending climate thaws, you'll likely see a burst of new hotel construction.
Hoteliers' response to the current situation has been interesting. While they might not be able to find financing for the construction of an entire hotel, some have pulled enough money together to build a lobby, bar or restaurant. And, apparently, they're feeling the pressure to renovate or completely rebuild these common areas.
It's not that existing public spaces in hotels are necessarily beginning to look tired. Rather, they are looking sooo 2008.
Back then, a hotel could attract a certain number of guests who believed that staying in a specific property would help them get a table at said property's $200-per-head celebrity chef restaurant.
But how the times have changed. Check out the Deathwatch section of the restaurant insider website Eater.com and you'll see an abundance of upscale restaurants that did not adapt to new consumer sensibilities.
"A few years ago, people would pay for access," said hotel consultant Steven Kamali. "But now, even acclaimed three-star chefs must look at creative concepts for people who are not willing to pay over $100 for dinner. People want to get more for their dollar."
And it's not just the food they're re-evaluating, Kamali said. "The decor, the ambience, everything."
Kamali works primarily with properties in New York and Miami, and he has served as a consultant to the Morgans Hotel Group and individual hotels, including ones flagged Shangri-La and W. He said that 13 of the projects for which he recently had been engaged ultimately fell victim to the economic downturn. But his business, which focuses in part on how food and beverage can help a hotel grow revenue, is nonetheless booming. In the past eight months, he's increased his staff, from three consultants to nine.
Several trends, Kamali said, have been building since the recession began.
Hoteliers, he said, are focused on "investing capital dollars in common areas because they want people in the community to enjoy them, too."
Not to mention that, typically, it's much cheaper and faster to refresh public spaces than commit to renovating all the rooms in, say, a 150-key property.
The previous hotel trend of creating a sense of home for road warriors in its public spaces is "on the verge of change," Kamali said.
What's taking its place is a sense of being in a crowd.
Though Kamali wasn't involved in the development of New York's Crosby Street Hotel, he believes it has "done an incredible job. There is more lounge seating than dining seating [in the restaurant]. That evokes the sense of being part of a large group," a feeling that's reinforced by the menu of cocktails and small share plates.
Likewise, New York's Standard Hotel gets high marks from Kamali for its clam bar and charcuterie and the big bar scene that goes with it.
"It's not a place to sit down for a great big dining experience," he said. "You will get a simple menu, fair pricing and a high-caliber chef."
Kamali cautions that there is no one-size-fits-all recipe for creating public spaces in hotels. "Depending on which guests you want to attract, the differences can be incredibly subtle," he said.
But there are some rules of thumb that do not seem to change, regardless of economic conditions: "The younger generations like music loud and rooms dark. Older people like open rooms and bright lights. In fact, they don't like the idea of being in what feels and looks like a nightclub, because it makes them feel old."
Ambience trends aside, the big question is: Once the economy turns around, will consumers really continue to prize "value" above all else?
"That's hard to say," Kamali replied.
Perhaps, but I have a forecast of my own: The shift to value is a pendulum trend. When times were flush, there was nothing to stop consumers from choosing value over access and excess, and yet they chose the latter. When the economy recovers, and there is once again choice between splurging and watching pennies, does anyone really think consumers are going to continue to prefer "small share plates" over a "great big dining experience"?
Email Arnie Weissmann at [email protected] and follow him on Twitter.