Hotel development remains surprisingly strong despite the weak economy, with the domestic construction pipeline at a record high in the first quarter of the year, Lodging Econometrics said in its quarterly report.
The hotel pipeline stood at 5,807 projects and 779,307 rooms.
"The pipeline continues to soar," said Patrick Ford, president of Lodging Econometrics. "It's a 60,920-room boost, an 8.5% increase over Q4 2007, and the 17th consecutive quarterly increase dating back to 2004. All projects have dedicated land parcels, are being actively pursued by developers and have been verified by the brands."
"'Developers remain bullish about the future," he continued. "For hotels under 200 rooms in the upscale, midmarket and economy sectors, financing is still available, albeit at much more difficult terms. At this time, regional banks and dedicated national lodging real estate lenders continue to be less constrained by the lending crisis."
Although project cancellations are increasing, the report said they were outpaced by new project announcements, which hit an all-time high of 125,442 rooms during the period.
Ford said 73 projects larger than 200 rooms were among the newly announced projects. Thirteen projects were casinos, while 13 others were already branded, seven of them by Marriott. The remaining projects are presently classified as independents.
"Approximately 70% of them will choose a brand prior to opening. These projects will open in the next decade as their developers anticipate that the lending crisis will right itself before they seek financing," Ford said.
"It's clear that developers see the softening economy throughout 2008, and perhaps 2009, as a shallow downturn," he said. "They view the lodging industry as a quite healthy, attractive investment class likely to bounce back quickly."
To contact reporter Jeri Clausing, send e-mail to [email protected].