When supply falls, it sets the stage for future prices to rise.
From: eTN
The number of hotel guestrooms in the construction pipeline in the US that have been abandoned increased 75 percent in November 2008 over November 2007, according to data from the Smith Travel Research/TWR/Dodge Construction Pipeline Report.
The total “active pipeline” for the US through November includes 631,680 guestrooms-including 191,807 that are in the “in construction phase.” The total “active pipeline” figure is 6.7 percent higher than it was in November 2007, while the number of rooms in the in “construction phase” is 6.8 percent lower than it was in November 2007.
November 2008 figures released last week show 93,219 guestrooms have been abandoned in various stages of development-from “pre-planning to “in construction.” That figure is 8,729 more guestrooms than in October 2008 and 39,887 more guestrooms than were abandoned as of November 2007.
“Given the current state of the economy and the non-existence of new-construction lending, these numbers aren’t surprising,” said Jan Freitag, STR’s vice president of global development. “We believe that we will continue to see this high level of abandonment through at least the first half of 2009. Until new funding for new and existing projects is made available by lenders, there is little reason to believe that the rate of abandonment will slow.”
Post a Comment