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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 3, 2011 - For the first time, Lodging Econometrics has announced its Forecast for New Hotel Openings for 2013. A total of 409 new hotels/39,162 guest rooms are anticipated to come online. LE also adjusted its Forecast for 2011 and 2012 down slightly, as continued economic uncertainty and the lack of construction financing still hamper development. In 2011, 390 hotels/42,187 rooms will open, with an additional 368 hotels/40,070 rooms to open in 2012. Net supply growth, after removals from inventory, will range from 0.6%-0.8% for each of the next three years.
The economy continues to struggle to sustain recovery, with recent setbacks in unemployment and consumer spending, fears of a double-dip recession, and concerns about the nation’s debt level. Developers are cautious and, for the most part, are on the sidelines as they await further improvements in the economy and guest room demand.
New Project Announcements (NPAs) into the Pipeline are trending downward, with just 187 new projects/23,795 announced in Q2. The total number of NPAs has been insufficient to offset total New Openings and project Cancellations exiting the Pipeline. Since NPAs are expected to stay at low levels for at least the next two years, it will be a while before they begin to surpass exiting projects, which would signal the start of a new development cycle. As a result, Total Pipeline counts will likely remain in a bottoming formation through the middle of the decade.
At 2,818 projects/339,866 rooms as of the end of Q2, total Construction Pipeline projects are down 15% and rooms 13% year-over-year (YoY). Financing difficulties continue to dampen project migration up the Pipeline toward construction, keeping Under Construction counts at lows not seen since the early 1990’s. At 387 projects/49,028 rooms, Under Construction totals represent a meager 14% of all Pipeline projects and rooms. Scheduled Starts in the Next 12 Months have also declined, reaching a new cyclical low of 950 projects/105,715 rooms. These are the main reasons why New Openings will keep trending at low levels.
The Early Planning stage, at 1,481/185,123 rooms, contains over half of all Pipeline projects and rooms, a growing trend for the fourth consecutive quarter. Developers are introducing projects at the Early Planning stage and continuing their planning, but are awaiting improvements in the financing environment and lodging operating metrics before advancing forward toward construction.
  • InterContinental Hotels Group has the largest Construction Pipeline of any company, with 574 projects/58,898 rooms. IHG recorded the highest number of New Openings during the quarter, with 31 hotels/2,836 rooms coming online, and is projected to have the largest number of total New Openings for all of 2011, with 92 hotels/8,728 rooms.
  • Hilton Worldwide currently has the most projects and rooms Under Construction, with 79 projects/9,381 rooms, as well as the highest counts for Scheduled Starts in the Next 12 Months, at 259 projects/29,376 rooms. Hilton is expected to open a total of 66 new hotels in 2011, the second largest number of New Openings this year for any company.
  • At 467 projects/56,118 rooms, Marriott International has the second largest Construction Pipeline. During Q2, the company announced the revival of two projects that will carry its luxury boutique brand, Edition. This includes a 170-room project in Washington DC and a 261-room property in the trendy South Beach section of Miami. Both were previously in the Pipeline, but had encountered development delays.
  • New York City has the largest Total Pipeline of any city, with 111 projects/18,341 rooms. The market is attracting strong developer interest, not just in Manhattan, but in the other boroughs as well. In Q2, NYC has the most NPAs, as well as the most Construction Starts. With 28 hotels/4,037 rooms expected to come online, NYC will have the highest number of New Hotel Openings in 2011.

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.

Lodging Econometrics
500 Market Street, Suite 13,
Portsmouth, NH 03801 USA
p: +1 603-431-8740

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Also See: 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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