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Lodging Econometrics Fall 2011 US Lodging Real Estate Trends Report
Shows Financing Constraints Continue to Impede Project
Migration Toward Construction

Projects Build up in Early Planning as Developers Schedule Market Entry for 2014 or Later

November 2011 - The lack of available financing and continued economic uncertainty remain major obstacles to Construction Pipeline growth, which is channeling in a bottoming formation for a 7th consecutive quarter. Project migration up the Pipeline toward construction is sluggish, resulting in extended timelines as developers wait for a more certain economic, lending and operating environment. Amidst a renewed emphasis by franchise companies to refresh their branded properties, many owners and investors who have accumulated funds from improving operations are now focusing on renovating existing hotels after a long period of postponement.

Projects Under Construction saw a slight increase over Q2 2011, but remain at cyclical lows, with 408 projects/51,599 rooms currently underway.  Scheduled Starts in the Next 12 Months decreased again, falling below the 100,000 rooms level for the first time in memory to a low of 834 projects/94,755 rooms. Due to the current complex economic environment, Scheduled Starts are expected to trend further downward, as developers, seeking the ideal time frame to open, continuously reassess the feasibility of getting their projects underway. In several cases, they have moved projects out of the 12 months to start window back into Early Planning while they await more favorable conditions.

At 1,609 projects/201,576 rooms, 56% of Total Pipeline projects and 58% of rooms are now disproportionately stockpiled in Early Planning. The back end of the Pipeline has built up due to the backward migration of projects from Scheduled Starts, and also because many New Project Announcements (NPAs) are entering the Pipeline at this stage and not being fast-tracked. Until the overall economy recovers more substantially and financing becomes more readily available, many developers continue to plan new projects, but anticipate that it will be 12-24 months before those projects move forward in the Pipeline.

Because timelines for projects exiting the Pipeline continue to be extended, LE has again revised its Forecast for New Hotel Openings slightly downward for the next three years. LE now projects a total of 375 new hotels/39,636 guest rooms to open in 2011, then 339 hotels/38,287 rooms in 2012. In 2013, 370 hotels/38,248 rooms are anticipated to enter Current Supply. Additional downward adjustments to LE’s Forecast may be ahead if there is not a near-term resurgence in the general economy.

NOTABLE DEVELOPMENT INITIATIVES

  • InterContinental Hotels Group recently announced two significant corporate initiatives. The first is a global renovation and repositioning program for Crowne Plaza properties, impacting 397 hotels in 60 countries. Seeking a more upmarket position, the company has created a new brand identity, along with enhanced designs and furniture and fixtures packages, along with improved services. IHG is requesting that the owners plan programs to reposition the hotels by 2015. IHG also announced that it intends to introduce a new midscale brand postured below its Holiday Inn and Holiday Inn Express labels. Details will be released early 2012.
  • Marriott International has signed a franchise agreement with the Granite Broadway Development Group to develop a 68-story tower at 54th Street overlooking Broadway in New York City. The tower will house a 378-room Courtyard by Marriott and a 261-room Residence Inn.  When complete in late 2013, it will be the tallest stand-alone hotel building (without residential or office space) in New York City.
  • Hyatt Hotels Corporation announced that it will rebrand its 38 Hyatt Summerfield Suites hotels, as well as the 16 Hotel Sierra properties the company recently acquired from LodgeWorks, LP, to its new extended-stay Hyatt House brand. The new name and signage will be in place in early 2012, with upgrades and renovations to be undertaken throughout the year. Hyatt will soon embark on a franchise program for the new brand.
Launched in 1995 with the encouragement of Wall Street analysts and many Lodging Industry leaders, Lodging Econometrics (LE) is the recognized authority on all hotel real estate including the Development Pipeline and the Sale and Transfer of Lodging Real Estate nationwide. LE also compiles and maintains the Industry's Census of Open and Operating Hotels including the Names of Owners & Management for more than 60,000 hotels in the U.S. and Canada.

Contact: 

Lodging Econometrics
500 Market Street, Suite 13,
Portsmouth, NH 03801 USA
p: +1 603-431-8740
Email: info@lodgingeconometrics.com

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Also See: Lodging Econometrics Report for Europe, Middle East and Africa Shows Economic and Financing Concerns Impede Pipeline Project Migration; Saudi Arabia Emerging as a Development Hotspot / September 2011

Lodging Econometrics Reports Latin America Pipeline Increases 14%, the 6th Consecutive Quarter of Increases; Development Continues to Rebound in South & Central America / August 2011

Lodging Econometrics Reports its Forecast for New Hotel Openings for 2013 at 409 Hotels/39,162 Rooms - Expects Net Supply Growth of Just 0.6%-0.8% for Each of the Next Three Years / August 2011

U.S. Transaction Prices Continue To Accelerate As Cap Rates Are At Pre-Recession Lows During Q1 2011; Average Selling Price at Record High of $125,946 Per Room, a 30% YoY Increase from Q1 2010’s $97,084 per room / June 2011

A Declining Pipeline Points to a Future Cycle of Profitability for U.S. Hotel Operators According to New Lodging Econometrics Report / May 2011

Lodging Econometrics Reports U.S. Hotel Openings to Remain at Cyclical Low in 2011 and 2012 / February 2011

Lodging Econometrics Q3 2010 Americas Real Estate Trends Report; Brazil's Pipeline Up 87% Year-Over-Year / December 2010

Lodging Econometrics Revises its 3rd Quarter Forecast for New Hotel Openings Downward to 562 Hotels for 2011 & 515 Hotels for 2012 / November 2010

Construction Starts for U.S. Hotels Reach a Record Low of 80 Projects with 8,566 Rooms in the 2nd Qtr 2010 / LE Forecast / July 2010

U.S. Hotel Construction Pipeline Decelerating Rapidly; LE First Quarter 2009 Results / April 2009
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