The Q3 2009 hotel construction pipeline is at a three-year low with 3,890 projects/485,664 rooms, according to a new report from Lodging Econometrics (LE). The report attributes the drop to the ongoing credit crisis, where banks both big and small continue to cut back on mortgage lending. Declining demand for lodging in many markets is also a key factor. As such, project count declines are accelerating in the upscale, midscale with and without F&B, and economy segments. What's more, only 139 projects/15,994 rooms started construction between July and December.

In addition, new project announcements (275 projects/34,468 rooms) have reached a new low for the cycle, while cancellations/postponements (438 projects/54,299 rooms) remain at elevated levels. Pipeline guestroom totals are down 34 percent year over year and 11 percent quarter over quarter. Transaction volume in 2009 is expected to be just 25 percent of what it was at the peak in 2007, with selling prices down by 50 percent.

A total of 1,032 new hotels, representing 111,642 guestrooms, opened in the first three quarters of 2009. An additional 355 projects/41,804 rooms are forecasted to open in Q4. LE has also decreased its forecast for new hotel openings for 2010, reducing it by approximately 10 percent to 988 projects/112,684 rooms. The research firm expects 749 projects/75,286 rooms to come online in 2011.