"The pipeline continues to soar," says Patrick Ford, presidentof the Portsmouth, NH-based industry research firm. He notes thatthis marks the 17th consecutive quarterly increase for hotelbuilding plans, dating back to 2004, and all of these projects havesecured sites as well as brand verification.

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Newly announced rooms totaled a record 125,442 during the firstthree months of 2008, which Ford calls surprising considering arise in cancellations and with new hotels opening in that timeframe. He points out that the first quarter is usually the slowestof the year for construction starts, yet 51,864 were started thisyear, the highest total of all quarters recorded in the currentdecade.

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"Developers remain bullish about the future," Ford said in thelatest Lodging Econometrics report issued late last month. "Forhotels under 200 rooms in the upscale, mid-market and economysectors, financing is still available, albeit at much moredifficult terms. At this time, regional banks and dedicatednational lodging real estate lenders continue to be lessconstrained by the lending crisis."

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Major hotel chains have advanced aggressive expansion plans sofar this year, including Marriott International Inc., which has atleast 130,000 rooms in its construction pipeline through the firstquarter, with 55,000 now under way. The company's limited-servicepipeline has 79,000 rooms through the first quarter, 5,000 morethan in the prior quarter.

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"Many of our larger limited-service franchisees are wellpositioned to reinvest in the sector," Arne Sorenson, Marriott CFOand EVP, said during an April 17 earnings call. "They are able tosecure financing through local banks with which they haverelationships, and are optimistic about the business and aboutMarriott brands."

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

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Lodging Econometrics counts 73 projects larger than 200 roomsbeing announced during the first quarter. Thirteen projects arecasinos, while another 13 were already branded, seven of those byMarriott.

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"The remaining projects are presently classified asindependents. Approximately 70% of them will choose a brand priorto opening," Ford says. "These projects will open in the nextdecade as their developments anticipate that the lending crisiswill right itself before they seek financing."

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Looking ahead, Lodging Econometrics forecasts 1,190 projectswith 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 agross growth rate of 3.5%.

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

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

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While supply growth forecasts for this and next year appearcertain, with 80% of those rooms under way, Ford says supply growthin 2010 and 2011 will depend on whether the softening economysignificantly affects lodging. Changes in operating performancecould affect the perception of lodging as an attractive investment,causing greater numbers of cancellations and a slowdown in newprojects, he says.

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