Hotel & Motel Management - February 4, 2008 - (Page 20)

20 Trends & Stats H&MM February 4, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Early reports, forecasts show 2008 supply thriving IN THE details Supply could outpace demand Owners/operators have questions Upscale and midscale booming Room growth in South Atlantic Total United States – Rooms under construction by scale (in thousands) – October 2007 60 50 40 30 20 10 0 Luxury Upperupscale Upscale Midscale Midscale Economy w/F&B w/o F&B Unafﬁliated 53.8 45.0 41.0 By Bobby Bowers H&MM Columnist hat’s the outlook for the U.S. lodging industry as we move into 2008 and beyond? At this point in the industry’s cycle, many hotel operators and analysts are asking the same question. Similar to most industries, lodging industry performance is largely dependent on the supply/demand relationship. While forecasting demand growth can be somewhat challenging, the Smith Travel Research/Torto Wheaton Research/F.W. Dodge hotel development pipeline can help provide good insights into the supply growth outlook. There are 582,000 hotel rooms in the active development pipeline—an increase of more than 8 percent from same period last year. Just more than 200,000 of these rooms have broken ground and are in the construction phase, a 25-percent increase from October 2006. Based on estimated new-construction openings and the historical rate of rooms removed from inventory, STR is forecasting 2008 net industry supply growth of 2 percent. Upper-end hotels tend to have longer construction periods. On average, luxury hotels require about two years from groundbreaking to opening, while economy properties normally take less than one year. Properties than actually break ground almost always (95 percent of the W time) open. Less than half (47 percent) of hotels in the planning stage open. Similar to recent supply growth trends, upscale and midscale-withoutfood-and-beverage hotels dominate the number of rooms under construction— one-half of rooms under construction are in these two categories. Although the luxury and economy segments are the smallest of all categories in terms of number of rooms under construction, these two segments have shown the most growth versus October 2006—an increase of nearly 70 percent for luxury rooms and almost 120 percent for economy rooms. Most hotel rooms in the “unafﬁliated” category will be chain afﬁliated but have not yet announced a brand afﬁliation. On a regional basis, the South Atlantic accounts for about one quarter of rooms under construction, while the New England (3 percent) and West North Central (5 percent) regions account for the lowest number. The top 10 Metropolitan Statistical Areas with the highest number of rooms under construction account for more than one-third—some 67,000 rooms— of total construction activity. The Las Vegas and New York MSAs, which are by far the biggest room construction markets, account for about 13 percent of the totals. Based on construction as a percentage of existing supply, some of these markets could face supply/demand imbalances. Based on the development pipeline numbers, we can say with certainty that U.S. hotel room supply growth will increase over the recent trends. Will demand keep pace? We’ll keep a close eye as 2008 evolves. hmm@questex.com Bobby Bowers is senior vice president of operations for Hendersonville, Tenn.-based Smith Travel Research. 29.5 8.9 10.9 11.1 Pipeline projects by scale – Average duration from construction start to open Luxury Upper-upscale Upscale Midscale w/F&B Midscale w/out F&B Economy 0 6 10.3 13.7 15.8 20.3 23.9 Months 12.9 12 18 24 30 Top 10 MSAs – Rooms under construction (in thousands)– October 2007 Las Vegas New York Chicago Washington D.C. Phoenix Dallas San Antonio Los Angeles Miami Orlando 0 4.4 4.4 4.2 4.0 5.5 5.8 6.7 6.3 11.6 14.1 5 10 15 Total United States – Active development pipeline – Rooms Change from previous year – October 2007 Oct 2007 In construction Final planning Planning Active pipeline 200,244 64,124 317,797 582,165 Oct 2006 160,228 60,246 317,067 537,541 Change 40,016 3,878 730 44,624 % Chg 25.0% 6.4% 0.2% 8.3% Pipeline attrition rates 74.0% 53.0% 20.0% 5.0% 26.0% 47.0% 80.0% 95.0% Preplanning Planning Open Final planning Abandoned Under construction © 2007 Smith Travel Research http://www.HotelMotel.com/digital_edition http://www.HotelMotel.com

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Hotel & Motel Management - February 4, 2008 Contents Murray, Keltner to Keynote Atlanta Event ABVI Approves Per-room Fee Hike Growth, Guest Loyalty on Lexington’s Plate Perspective Legally Speaking AAHOA Update Marketing Matters Consultant’s Corner On Finance Training Trends HotelWorld Update Trends & Stats Outdoor Furniture Limited-service-hotel-chain Report Energy-management System Provides Link to Savings Upgraded Bedding Program Cost Comes Due Less Hot Water Equals Less-costly Bills Events Learn to Take Advantage of Lower Insurance Costs Brokers Will Remain Unscathed in 2008 Transactions Ad/Edit Index Marketplace Classifieds Checking Out

Hotel & Motel Management - February 4, 2008

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