Trouble Building in Hotel Construction

In the online edition of the National Real Estate Investor an article was published on November 11th by Matt Hudgins regarding the trouble building in hotel constuction. According to Mr. Hudgins, developers are building more new hotels, increasing the global supply of hotel rooms at a remarkable pace even as per-room revenue and occupancy rates decline for most of the world.

As of September 30, 2008, more than 1.8 million hotel rooms are in the pipeline, a 28% increase from one year ago. Construction spending for hotels has been increasing faster than for any other non-residential sector in the past 2 years.

With the global economic slowdown occupancy rates have started to decline and are likely to continue declining. Adding additional hotel rooms will further drive down the occupancy rates as increased supply is coupled with the softening demand for rooms. For those who travel a lot, it should be a buyer's market.

It should also not be surprising if hotel projects that are still in the planning stage are put on hold for the indefinite future.

To read Mr. Hudgins' article, click here.

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