"The pipeline continues to soar," says Patrick Ford, president of the Portsmouth, NH-based industry research firm. He notes that this marks the 17th consecutive quarterly increase for hotel building plans, dating back to 2004, and all of these projects have secured sites as well as brand verification.

Newly announced rooms totaled a record 125,442 during the first three months of 2008, which Ford calls surprising considering a rise in cancellations and with new hotels opening in that time frame. He points out that the first quarter is usually the slowest of the year for construction starts, yet 51,864 were started this year, the highest total of all quarters recorded in the current decade.

"Developers remain bullish about the future," Ford said in the latest Lodging Econometrics report issued late last month. "For hotels under 200 rooms in the upscale, mid-market and economy sectors, financing is still available, albeit at much more difficult terms. At this time, regional banks and dedicated national lodging real estate lenders continue to be less constrained by the lending crisis."

Major hotel chains have advanced aggressive expansion plans so far this year, including Marriott International Inc., which has at least 130,000 rooms in its construction pipeline through the first quarter, with 55,000 now under way. The company's limited-service pipeline has 79,000 rooms through the first quarter, 5,000 more than in the prior quarter.

"Many of our larger limited-service franchisees are well positioned to reinvest in the sector," Arne Sorenson, Marriott CFO and EVP, said during an April 17 earnings call. "They are able to secure financing through local banks with which they have relationships, and are optimistic about the business and about Marriott brands."

Meanwhile, Starwood Hotels & Resorts Worldwide Inc. announced plans earlier in April to open 54 new Sheraton hotels totaling approximately 20,000 rooms throughout North America by next year. The company's goal is to open a hotel every 12 days under the $2-billion expansion plan.

Lodging Econometrics counts 73 projects larger than 200 rooms being announced during the first quarter. Thirteen projects are casinos, while another 13 were already branded, seven of those by Marriott.

"The remaining projects are presently classified as independents. Approximately 70% of them will choose a brand prior to opening," Ford says. "These projects will open in the next decade as their developments anticipate that the lending crisis will right itself before they seek financing."

Looking ahead, Lodging Econometrics forecasts 1,190 projects with 133,623 rooms will open this year, 2.8% more than last year. In 2009, 1,545 projects with 170,417 rooms are predicted for a gross growth rate of 3.5%.

Ford cautions that existing hotels in many markets will likely be impacted by new supply coming online over the next few years. For example, Phoenix has 122 hotels in its construction pipeline totaling 18,583 rooms, boosting that city's inventory by almost one-third.

Seven hotels with more than 1,000 rooms were announced in the first quarter, including four that had been removed from the pipeline in past years and are reactivated, according to the Lodging Econometrics report. Three of these are casino projects, while another is a 3,500-room Marriott in Las Vegas.

While supply growth forecasts for this and next year appear certain, with 80% of those rooms under way, Ford says supply growth in 2010 and 2011 will depend on whether the softening economy significantly affects lodging. Changes in operating performance could affect the perception of lodging as an attractive investment, causing greater numbers of cancellations and a slowdown in new projects, he says.