While new hotel construction in the pipeline is down, existing hotels are experiencing a surge in their operations. According to officials at Lodging Econometrics or LE (http://www.lodgingeconometrics.com/), “The timing of the slowdown in new openings could not be more perfect.” Due to the slowdown in this area, existing hotels are experiencing operating improvements that “are better than expected and should continue trending upward, as there will be few new supply headwinds to overcome for the foreseeable future.”
Due to the recession, new hotel construction is expected to continue to slow down over the next few years. Presently, projects in the pipeline are the lowest that LE has ever recorded. Their current construction projections for hotels presently under construction show 487 projects (62,041 rooms), which is down 72 % from the second quarter of 2008. The projected construction for hotels that are still in the early planning stages is at its lowest, since the end of 2004. Overall the numbers are down 45% since the second quarter of 2008.
The by and large result is that hotel rates are expected to rival rates last seen in the early 1990s. This is great news for planners who are expected to cut down meeting expenses. As well, meeting planners whose budgets have not been greatly affected by the recession may be able to take their meetings to new and more exotic locales; they may be able to offset the cost of airfare with the smaller than usual cost of hotel room nights. Recessions come with their challenges, but there is still “gold” to found.
This is exactly the kind of information that meeting planners can use to put management at ease. Too often management is quick to cut meetings as a “frivolous expense.” Done right, the meeting planner that keeps their eyes on the trends and watches the financial forecasts can become a valuable resource to their organizations and aid management in making decisions that make sense. Not only will this allow the organization to stay on track, but it will go a long way in keeping up morale and create space for ever and continuing growth.