Portsmouth, NH, May 18--Lodging Econometrics reported in the latest edition of its subscription Lodging Development Forecast and Trends Report that total projects in the construction pipeline at the end of 1Q 05 were 2,388 hotels having 322,177 rooms. This is the fifth consecutive quarterly increase from the Pipeline bottom of 1,903 hotels/246,895 rooms set in 4Q 03.
Patrick Ford, president, said, "Although new project announcements have started to accelerate, the size of the construction pipeline is still distant from the peak set in 3Q 98 at 3,913 hotels/545,849 rooms."
With the construction pipeline growing at a more rapid pace, LE has minimally increased its earlier forecast of New Supply Growth, adding 1,652 rooms in ’05, raising guestroom openings to 70,251 and 3,978 rooms to 82,619 for ’06.
LE’s forecasted supply change remains at an estimated net Growth Rate of 1.2% in ’05 and 1.4% in ’06.
According to Ford, "Rising New Project Announcements will not materially affect supply growth rates until 2007 and beyond, as it takes at least two years for projects to flow through to completion; even longer as the projects increase in size. Low Supply Growth sets the stage well for the industry’s profitability expansion through the end of the decade."
In 1Q, 445 new hotels with 63,005 rooms were announced into the Construction Pipeline. It’s the largest number of new projects announced in 16 quarters. The Midscale without Food and Beverage (F&B) segment had the most new announcements with 126 projects/10,517 rooms.
The Upscale segment had 63 projects/7,746 rooms announced and there were nearly identical counts for Midscale with F&B at 60 projects/4,810 rooms, and in the Economy segment with 60 projects/4,709 rooms. Twelve new Casino projects having 13,771 rooms entered the Pipeline. It’s the highest guestroom count for any segment.
Of the 110 Independent hotels/17,554 rooms announced into the Construction Pipeline in 1Q, "Only about 5,000 will actually open as independents as the remainder are expected to become branded in various chain scales prior to opening," said Ford.
Only four new Luxury and 10 Upper Upscale projects were announced in 1Q. There are now a total of 24 Luxury hotels in the Pipeline. Interestingly, 21 of them have a planned residential condominium component.
