Hotel Online  Special Report

Eight Markets Likely to Outperform the U.S. Hotel
Industry’s Improving Operating Trends in ’04
Lodging Econometrics Supply Side Forecast
May 18, 2004 - Lodging Econometrics (LE) has released a new, first-of-a-kind report – a Supply Side Forecast and Trends Analysis for all 197 markets and 593 market tracts throughout the United States.  “This report forecasts growth rates – units, guestrooms, and percentage growth rates for ’04, ’05 and beyond – for every market in the entire country,” said Patrick Ford, President of LE.

Ford continued, “Using this first-ever report, developers, operating and marketing executives, revenue managers, consultants, lenders and others can now have an exacting forecast for Supply Side Growth at their fingertips, not just Industry-wide, but one that drills down even deeper – analyzing each region, state, market, and market tract.”  This new analysis, available in both print and electronic formats, is an ideal reference for strategic planning, as it identifies all emerging markets, and highlights those markets of concern.  It’s everything anyone needs to be their own Supply Side consultant.

The initial report shows future Supply Side Growth to be very benign.  At 62,005 rooms, 2004 is forecasted to have the smallest number of guestroom additions since 1994.  Net new supply will be just 1.2%.  Only eight states – Alaska, Arkansas, Maryland, Nebraska, New Jersey, New Mexico, Texas, and Virginia – will have growth rates in excess of 2% in ’04.  The total is a cyclical low, down from 18 states in ’02 and 12 in ’03.  The states with the largest number of new guestrooms forecasted for ’04 are Texas with 7,812 rooms/74 hotels, California with 6,221/52, and Florida with 6,048/49.

On the regional level, – the West South Central, which includes Texas, Louisiana, Oklahoma, and Arkansas – is forecasted to grow in ’04, at a 2.3% rate.  It’s the only region above LE’s 2% threshold.

In ’05, overall Industry-wide supply growth is expected to up-tick slightly.  LE forecasts 71,039 rooms/668 hotels, for a net growth rate of 1.3% – still below ’03 growth levels.

The Report also contains two years of historic trends for new supply additions, portrays the Census of all Open and Operating Hotels, and details the current Construction Pipeline, for every market and tract iteration.

In a special section, LE’s market specialists have computed in-depth analysis of the 25 largest markets, comparing both supply and demand trends.  LE is forecasting eight markets as likely to Outperform the Industry’s improving Operating Trends in ’04: 

  • Anaheim, 
  • Los Angeles, 
  • Miami, New York, 
  • Norfolk, 
  • Oahu, 
  • Phoenix and 
  • Washington, D.C. 
Eleven other markets will Model the Industry’s recovery.  Only six markets are expected to Underperform as they struggle to absorb excess supply from the past few years: 
  • Atlanta, 
  • Boston, 
  • Denver, 
  • Detroit, 
  • Houston and 
  • St. Louis.
Ford said, “The Construction Pipeline is still in a bottoming formation with ’04 likely to be its lowest point.  A growing economy, and improved operating performance will eventually trigger renewed construction activity.  But first, signs of sustained job growth and increased business travel are necessary to spark higher levels of development.”

“LE’s exacting market research and analysis, updated quarterly, should prove invaluable to Franchise Companies, Developers and other investor groups searching for development opportunities.  Since it can take up to three years or more from market targeting to a project opening, Developers have already begun targeting markets for the next construction cycle.  LE’s initial Supply Side Forecast and Trends Analysis should prove quite timely,” said Ford.

LE will update and reissue the forecasts every quarter hereafter.  Every construction project is researched with the Developer to obtain the latest construction Start and Scheduled Completion Dates each quarter.  New project announcements are added and cancellations are removed.  Each record is then re-verified with 95 Brands and over 60 Contractors and Project Managers.  Ford said, “Our quarterly project-by-project review guarantees that all forecasts are always accurate and dependable.”

LE’s new Supply Side Forecast and Trends Analysis for Every U.S. Market and Tract, or a report customized for your particular market(s) of interest can be ordered by calling Bruce Ford at (603) 431-8740, ext. 18.

Lodging Econometrics (LE), of Portsmouth, NH is the industry authority for hotel real estate, offering comprehensive Individual Project Records for over 65,000 hotels throughout the country – for every Open and Operating Hotel; every project in the Development Pipeline, including New Construction, Conversion/Reflaggings and Announced Renovations; and for all Real Estate Transactions and Merger Transfers.



Amy Hauck
Phone: (603) 431-8740 ext. 25

Also See: Hotel Developers Reacting to the Slower Than Hoped For Recovery / Lodging Econometrics / July 2003
Development Pipeline Declines Set Stage for Lodging Industry Recovery / July 2002

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