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STR reports U.S. Hotel Pipeline for December 2008

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The total active U.S. hotel development pipeline includes 5,706 projects with 612,892 rooms, according to the December 2008 STR/TWR/Dodge Construction Pipeline Report released this week.

This represents a -0.4% decrease in the number of rooms in the total active pipeline over December 2007. The total active pipeline data includes projects in the In Construction, Final Planning and Planning stages, but does not include projects in the Pre-Planning stage.

Of the total active pipeline, 223,159 rooms are located in the nationís top 26 markets-down 11.3% from a year earlier. The top 26 markets have 73,985 rooms in the In Construction stage, a 19.7% decrease from the 92,098 rooms in the In Construction phase in December 2007.

"The number of In Construction rooms fell in many of the top 26 markets as room demand continues to soften and financing for development remains scarce," said Duane Vinson, vice president of STR. "Given the current situation with the credit market, we expect to see this trend continue."

Vinson added that if the recession drags into the third quarter of 2009, a high number of deferrals and full abandonment of projects in the total active pipeline is expected.

The individual markets that comprise the top 26 markets tell a story of extremes in December:

Houston, Texas, had a 130.3% year-over-year increase in the In Construction phase with 4,599 rooms in that stage. It had 14,514 rooms in the total active pipeline, a 101.9% jump over the 7,187 rooms in the total active pipeline in December 2007.

 New Orleans, Louisiana, posted a 93.9% hike with 3,073 rooms in the total active pipeline (1,585 in December 2007) and a 137.6% increase in rooms in the In Construction stage (1,048 in December 2008 vs. 441 in December 2007).

 New York, New York, had the most rooms in the total active pipeline in December with 21,941 (12.7% more than the 19,466 in December 2007). The city had 10,252 rooms in the In Construction phase in December 2008, a 16.2% jump over the 8,819 rooms in December 2007.

 Las Vegas, Nevada, had 21,447 rooms in the total active pipeline (50.4% fewer than the 43,218 in December 2007), including 11,845 in the In Construction stage (47.1% fewer than the 22,409 rooms in December 2007).

 San Diego, California, experienced a 68.5% year-over-year drop in rooms In Construction (936 in December 2008 vs. 2,975 in December 2007).

Minneapolis-St. Paul, Minnesotaís In Construction number dropped 74.9% to 514 rooms (from 2,047 in December 2007).

"The existing supply growth rate for the top 26 markets continued to climb in December and should peak in early to mid-2009," Vinson said. "While the Final Planning and Planning phases of the pipeline remain robust, the lack of new construction started in the second half of 2008 will result in slower supply growth rate in late 2009 and 2010."

The total existing supply for the U.S. hotel industry is 50,815 hotels comprising 4,693,590 rooms.

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