While the PKF forecast calls for slowed growth, the rate isstill above the Smith Travel Research long-term average of 3.4%.The findings of the report were issued in the fourth quarteredition of Hotel Horizons, the quarterly lodging report produced byPKF.

"Given the cyclical nature of the lodging industry, a slowdownin performance does not come unexpectedly," says PKF HospitalityResearch president Mark Woodworth, in a released statement. "Hotelconstruction activity is picking up and will cause a modestimbalance between supply and demand."

The report says that although the total number of new hotelprojects is at an all-time high, the number breaking ground issmall due to high costs of construction and land, and firmercapital market discipline. In many cases, renovation projects aremore feasible than new construction. "Given our analysis of currenthotel construction activity, PKF is forecasting a 2.6% increase inlodging supply in 2008, or approximately 115,000 new hotel rooms,"Woodworth says. "This is the greatest annual supply increase since2000, but still less than the 150,000 new rooms added in both 1998and 1999."