NEW YORK CITY-An increase in the amount of business travel is supporting a slow recovery of the nation’s lodging industry. And the level of transactional activity can infer that a recovery is in process, according to the recently released update of Ernst & Young’s 2004 National Lodging Report.

Michael Fishbin, national director for Ernst & Young’s hospitality advisory services, tells that some interesting trends include moves in such cities as Boston and New York City toward investing in condominium hotel concepts. He says it’s a different way of accumulating development capital.

The level of transactional activity in the sector can indicate confidence, says Fishbin. “and that we’re on a recovery.” He notes there is increasing activity on both coasts and particularly in the luxury market. One area that is performing well is San Diego. Fishbin says San Diego has a strong appeal as a both a convention site and a drive-to leisure destination.

Fishbin also says E&Y is spending more time looking at development projects. “It’s not full force on development, but there’s an active pipeline.” That’s also corroborated by Lodging Econometric’s latest forecast on the construction pipeline.

The total new construction pipeline increased by a modest 48 projects having 9,090 rooms in the second quarter. “It’s a sign that the Pipeline’s bottoming formation has ended, and we have now entered into a new up-trending construction cycle that should last for three or four years,” says LE president Patrick Ford, adding that the cycle is in its infancy.

Mold is an increasing concern for the hotel owners, Dan Lentz, a partner and co-director of E&Y’s insurance and claims services practice, tells “It’s extraordinarily difficult to put a dollar value because nobody wants anybody to know they have a mold problem.” He labels the issue “widespread” and notes it has more to do with construction and maintenance than with the outside environment. According to E&Y’s report, the cost of remediating a serious mold problem can exceed 50% of a hotel’s initial construction cost, not including claims. Lentz says many are using the blanket label of reconstruction to avoid the stigma associated with the term “mold.”

The booming cruise industry, which is anticipating 10 new ships and more than one million new passengers this year alone, is also taking a bite out of the lodging market; however, plans are in the works to turn the normally “contentious” relationship around through cross-marketing efforts to try for guest loyalty in the long term.

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