"The hotel business is still extremely profitable, but as we steer clear of this possible recession, which I see as still just a downturn, things will flatten out," Heiser tells GlobeSt.com. "There's remains a good chance things could bounce back in the latter part of this year, but if we actually go into a recession, it will take a bit longer."Shoring up the industry is the fact that not much development is in the pipeline, says Heiser, in part because financing is difficult to obtain, especially for larger hotels requiring $25 million or more.

"The big capital companies are still looking for repositioning and re-branding opportunities," explains Heiser, "but to a certain extent they are out of the buying market. For the most part it hasn't been accretive for them over the past 18 to 24 months, so a lot of them have been net sellers rather than buyers, selling off non strategic properties and using the capital to buy back stock when the price was down low, and to reduce debt."

Heiser cautions, however, that these are general trends and that the situation will vary on a market-by-market basis. Not much, though, GlobeSt.com is finding.

Paul Jinneman, a partner in the Seattle-based hotel consultancy Jinneman, Kennedy, & Associates PS, tells GlobeSt.com that transactions in the Northwest have ground to a trickle, and most every market except Downtown Seattle is still recovering from overbuilding that started about five years ago. "The decline in the economy will lengthen out that cycle while occupancy picks up and kicks off another development round," says Jinneman, whose company keeps track of the industry in Oregon, Washington and Alaska. "Things have definitely softened but not to the point of distressed sales."

If the slowdown in demand and occupancy continues through the summer, which Jinneman anticipates, "we may see more transactions as non-hoteliers who've invested in limited-service assets in their home towns and not seen the return they'd hoped for decide to get out of the business.

In Texas, Austin is getting pinched the hardest in a slowdown of the hotel market, reports Southwest bureau chief Connie Gore. Still, industry experts are telling her it's not all bad news for the travel circuit. Rates are stable, demand is solid and occupancy could very well benefit from the construction slowdown.

The slowdown is not a sign of sagging demand, explains Bruce Walker, president of San Antonio-based Source Strategies but rather the difficulty in obtaining funding. John Keeling, senior VP of PKF Consulting in Houston, validates that assessment.

Statewide, there are 301,000 rooms, of which 32,400 are in the upscale category. That's a lot of upscale supply, but not so much that it is skewing the numbers for the industry, says Walker. "Overall we are very healthy," he contends. "We don't have any sign yet that there's a demand problem." And, the mid-scale category, which accounts for 63,000 rooms, continues its decade of strong growth.

Steve Marx, president of Hotel Source Inc., tells Midwest bureau chief Mark Ruda that the Chicago hotel market is softer this year, with less corporate, tourism and convention business reported. However, he adds, the Midwest region is faring better than other places, such as New York and San Francisco, and "success stories" still can be found.

Brian D. Flanagan, president of Property Valuation Advisors Inc., sees current hotel economics as a wash--first-quarter occupancy is off about 3.5% he says, but that's offset by a 3.5% improvement in the average daily room rate. Part of the reason for the solid CBD room rates, says Flanagan, is that financing is tougher to get for bigger developments. One submarket where would-be hotel developers may want to consider is limited-service properties in the suburbs, he suggests.

If those types of properties sell, they may change hands at cap rates approaching 13%, Marx suggests. Overall, the range is from 10% to 13%, he explains, with CBD properties commanding caps at the lower end of the spectrum, perhaps as low as 9%. However, that's up from 7% to 8% seen last year, Marx adds.

Over in the Northeast, Mark Gordon, a managing partner in Sonnenblick-Goldman's International Lodging and Leisure Group, tells bureau chief Amy Vaughn that "there has been a reduced amount of aggressive buyers" in the hotel market. He also notes though, that "New York City hotels are still performing extremely well.

"The market is very competitive, and there is strong debt capital," he says. "First mortgages and mezzanine capital will likely fuel transactions. Clearly there has been a slowdown even here in New York, and investors have taken a step back, but we are not seeing significant adjustments in pricing of properties. I don't think that's appropriate. Also, we're not seeing significant changes in capitalization rates."

Gordon notes that his investment firm does not deal with "distressed-property clients," and that the four- and five-star hotels he does primarily deal with are holding steady. "Most of our clients don't have to sell, and if they choose to do so and they don't get the asking price, then they refinance instead."