With 2,328 projects and 314,185 rooms in the Total Development Pipeline, room counts represent a 10.4% quarter-to-quarter decline and a 28% drop since January 2001. The declines were in all stages of development and across all Chain Scales except for independent, non-branded hotels.

The Total Development Pipeline is defined as all hotels currently Under Construction, all those expected to Start Construction Within the Next 12 Months, and all that are in Early Planning.

In 4Q �01, the net decline in the Total Pipeline was 263 hotels having 36,505 rooms. 209 hotels with 22,811 rooms opened in the quarter, while 403 projects with 47,730 rooms were cancelled, put on hold or declared temporarily inactive by Developers.   Newly entering the Pipeline during the quarter were 349 projects with 34,036 rooms, slightly less than the 354 new projects announced in 3Q.

Of 286 anticipated new openings for 4Q, 125 projects or 44% were delayed until 2002 as developers slowed the pace of construction hoping to postpone hotel openings until the economic climate improved. New openings for the entire year 2001, at 1,055 projects with 111,405 rooms were the lowest since 1995.  The average room size was 106 rooms. 

The 759 projects and 108,538 rooms now Under Construction average a much higher 143 rooms and will produce a higher proportion of new guest room openings per project over the next two years.  Of these, 23 exceed 500 rooms each with an average size of 946 rooms. Many are in central business districts or destination resorts and will add to room supply in several of the top markets.

With 902 projects and 113,417 rooms, the total number of projects Scheduled to Start Construction Within 12 Months is high compared to the number already Under Construction, reflecting a �bunch up� of delayed projects as many developers are having difficulty securing financing. 

Projects in Early Planning are down 14%, the lowest level since the early �90�s at 667, and the room count has fallen below 100,000 rooms for the first time this cycle to 92,229 rooms.

In the Top 25 Markets, project counts are dropping, but room counts are not keeping pace.  New openings averaged 140 rooms in �01, but hotels Under Construction and scheduled to open ever the next two years have an average size of 192 rooms.

MSAs showing declines in the Pipeline are Chicago, Anaheim, Dallas, San Francisco, Washington, Miami, Atlanta, New York and Nashville.  A softening of the Pipeline in these markets is crucial as the Top 25 play a disproportionate role on the Industry�s operating statistics.  They account for 22% of the hotels, but 32% of the guest rooms and 43% of the industry�s revenue.
 
Based on a Soft Landing scenario developed by the company prior to 9/11, Lodging Econometrics  (LE) was preparing to launch a line of market research portfolios in 3Q for use by hotel operating executives, franchise development teams, vendors and others in the industry.

The radical changes in development conditions following 9/11 forced the company to delay the project in order to better incorporate changes announced by hotel companies and developers as they rapidly revised proposed hotel construction timetables and withdrew projects in the post 9/11 confusion. 

LE re-verified the status of over 2,500 planned hotel projects in the U.S. to clarify the new conditions in the Development Pipeline. By the end of 4Q, LE had completely updated its research database for all hotel brands and independents to reflect the unprecedented changes in the market as reported in the Guidance memo.  The company has since moved forward with its new portfolios.

Lodging Econometrics, the research division of  National Hotel Realty is the lodging industry�s real estate market expert. It analyzes Market Trends, Market Share and the Current Hotel Census for every major U.S. city. It also tracks all New Development projects, Sales Transactions, and the Strategic Plans of major hotel companies, REITS and investor groups.  National Hotel Realty provides brokerage, consulting and management services to the lodging real estate and lending industries.