Hotel Real Estate Construction Activity Sees Largest Quarterly Increase Since Last Decade

May 10, 2005
Lodging Econometrics’ latest report shows a growing pipeline of new construction

According to the latest Lodging Development Forecast and Trends Report from Lodging Econometrics (LE), hotel real estate projects in the construction pipeline at the end of first quarter 2005 totaled 2,388 hotels having 322,177 rooms. This is the fifth consecutive quarterly increase since fourth-quarter 2003, when construction activity was reported at 1,903 hotels and 246,895 rooms.

“Although new project announcements have started to accelerate, the size of the construction pipeline is still distant from the peak set in third-quarter 1998, at 3,913 hotels/545,849 rooms,” says Patrick Ford, president, LE.

Due to the rapid pace of growth in the construction pipeline, LE has minimally adjusted its earlier forecast of New Supply Growth, adding 1,652 rooms in 2005, which will raise guestroom openings to 70,251, and increasing 2006 estimates to 82,619 (an increase of 3,978 guestrooms). “Rising new project announcements will not materially affect supply growth rates until 2007 and beyond, as it takes at least 2 years for projects to flow through to completion; even longer as projects increase in size,” says Ford. “Low supply growth sets the stage well for the industry’s profitability expansion through the end of the decade.”

To view Lodging Econometrics Lodging Development Forecast and Trends Report, visit (

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