Hotel development sags in third quarter amid continuing credit crunch

The hotel development sector is feeling the impact of the ongoing credit crunch, with new project announcements nationally falling to their lowest level in nearly five years and cancellations or postponements continuing to rise in the third quarter, according to a Lodging Econometrics report released today. A lack of funding for projects has contributed to the presence of fewer new hotels in the construction pipeline, which is down to 3,890 projects overall, a three-year low. After 1,032 new hotels opened in the first three quarters of 2009, 355 projects with 41,804 rooms are slated to open during the remainder of the year. The report predicts 988 hotel projects, amounting to 112,684 new rooms, will open in 2010, a 10 percent decrease from Lodging Econometrics’ previous forecast for next year. The fall can likely be attributed to expected postponements and cancellations, and to difficulties in securing loans, especially for relatively small projects, Lodging Econometrics said. TRD