new report

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An increase in new project announcements for the most recentquarter was offset by a higher number of project cancellations inthe same period, the report states. At the same time, one third ofthe Canadian pipeline is already under construction and is certainto open in the coming year.

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The second-quarter decline brings an end to two solid years ofhotel growth within North America's provinces, with developers nowturning cautious because of the slowing economy and little or nofinancing for future projects, says Patrick Ford, president ofPortsmouth, NH-based Lodging Econometrics.

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"The blueprint in how it's rolling out is almost parallel withthe states," Ford tells GlobeSt.com, pointing to a similar peak inthe US hotel pipeline. While he terms the decline in hoteldevelopment between the first two quarters in Canada as "modest andmoderate," he says his firm has revised its forecast for new hotelopenings downward to 3.4% gross growth this year and 3.3% in2009.

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New projects announcements into the pipeline, at 29 projectswith 3,129 rooms, are at their second-lowest point since the end of2005, while project cancellations, at 24 projects and 2,302 rooms,are the highest ever recorded by Lodging Econometrics, Ford statesin the new report for Canada. Construction starts within thepipeline, at 19 projects with 2,142 rooms, have been sluggish forthe last three quarters, he says.

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Despite an abundance of commodities that theoretically wouldhelp prop up its economy, Canada is suffering the same residualslowdown effects experienced throughout the rest of the world, Fordsays. "Canada is a country with resource wealth, whether you'retalking lumber, minerals, energy or oil," he says. "It has alwayshad solid exports, but those exports will soften as the worldeconomies soften."

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Ford adds that tighter lending restrictions by Canadian banks,in similar fashion to those in the US, are stunting plans for newprojects as well as previously announced projects that are havingtrouble moving forward because of financing difficulty. "Migrationup the pipeline is slowing and the size of the pipeline isdecreasing," he says.

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A nationwide total of 37 hotels with 4,173 rooms opened inCanada in the first half of this year, with Lodging Econometricsforecasting 80 openings with 9,288 rooms for all of 2008. The firmpredicts 73 hotels with 9,386 rooms opening in 2009, followed by 92hotels with 10,689 rooms in 2010.

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