Reay comments that the surge in construction is "a sign of howwell the California hotel market is doing," with lenders anddevelopers both bullish on the state's hospitality market. Thenumber of new rooms under construction soared 68% to 13,341,according to the report, but new openings dropped by 15% to3,265.

The boom in construction "is also a good indication of how highsales prices are on existing hotels, which makes the option of newconstruction much more appealing," Reay says. "We believe thatCalifornia is just now making up for many years of very little newconstruction" and that the new supply will be readily absorbed,Reay adds.

In Los Angeles County, the 1,493 new hotel rooms under way in2006 represented a 133% increase from the 642 rooms in 2005, but nonew rooms opened in the county in 2006. The 372-room Embassy Suitesin Glendale is the largest hotel currently under construction inthe county.