There are currently 2,328 projects and 314,185 rooms in the total development pipeline--which is all hotels currently under construction, all those expected to start construction within the next 12 months, and all that are in early planning. These figures represent a 28% drop since January 2001. In the fourth quarter of last year, the net decline in the total pipeline was 263 hotels having 36,505 rooms. There were 209 hotels with 22,811 rooms that opened in the quarter, while 403 projects with 47,730 rooms were cancelled, put on hold or declared temporarily inactive by developers. Newly entering the pipeline during the quarter were 349 projects with 34,036 rooms, slightly less than the 354 new projects announced in the third quarter.

Of the 286 anticipated new openings for the fourth quarter, 125 projects, or 44%, were delayed until 2002. New openings for the entire year 2001, at 1,055 projects with 111,405 rooms were the lowest since 1995. Yet another indication of the decline, according to the report, is the total number of projects scheduled to start construction within 12 months--902 projects and 113,417 rooms--which is high compared to the number already under construction. This reflects a "bunch up of delayed projects as many developers are having difficulty securing financing."

Furthermore, projects in early planning are down 14%, the lowest level since the early 1990s at 667, and the room count has fallen below 100,000 rooms for the first time this cycle to 92,229 rooms.

"The peek in hotel development was 1998," Peter Gluckler, vice president of marketing at Lodging Econometrics, tells GlobeSt.com. "Since then hotel development began to decline." Gluckler says that the industry began to slow itself down to prevent the surplus of rooms that it faced in the early 1990s. But GlucklerThe impact on hotel development was mainly with developers who had hotels to build and either delayed or cancelled their plans. "There was some uncertainty about what the future would points out that a decline in development continued through 2001 and was further accelerated by the terror attacks of September 11. "We saw hotel occupancies plummet" after the attacks, notes Gluckler.

hold and an inability to get financing for new hotel construction," says Gluckler.

Instant Insights /

Hotel Development Pipeline Drops to Lowest Point Since Early '90s

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