Hotel construction down to record lows

January 25, 2010 01:32PM

Hotel construction is at a relative standstill as lenders continue to tighten their belts to ward off further commercial real estate losses, according to a revised 2010 forecast from Lodging Econometrics. The research firm now predicts the opening of just 717 hotels with 82,620 rooms this year, 56 percent fewer than in 2009. In October, Lodging Econometrics had predicted 988 new hotel openings for 2010, but “the near-disappearance of lending” has led to a historically high number of project cancellations and postponements. In the fourth quarter of 2009, there were 767 hotel projects under construction — the lowest level in more than four years — and that number is expected to fall further still. Meanwhile, construction starts totaled 119 projects during the quarter, the lowest since the beginning of 2002. Though the drop-off in new hotel developments is bad news for the construction industry, hotel owners may breathe a sigh of relief as there will be fewer rooms than previously expected to absorb the increase in business and leisure travel. Smith Travel Research recently reported that close to 100 new hotels are slated to open in major U.S. cities this year — 46 of them in New York City. New additions to the market include Hyatt’s 253-room Andaz hotel at 75 Wall Street, which opened earlier this month, and the James Hotel, which is expected to open in Soho this summer. TRD

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