Less building =
pricier rooms in Miami.
Few full-service city hotels are in development
over the next two years, according to a recent industry report. As
a result, say the experts, planners will face high occupancy levels
and increased room rates in some cities as demand outstrips
supply.
The February 2005 report, issued by Portsmouth, N.H.-based
Lodging Econometrics, found only 122 new hotels opened in 2004,
down from 147 in 2003. Much of the new inventory was comprised of
mid-market brands like Fairfield Suites and Holiday Inn.
“There’s an absence, compared to prior years, of large
convention properties [being built] in central business districts,”
said Patrick Ford, president of Lodging Econometrics. “Instead, you
see a lot of renovating and reflagging.”
Atlanta-based PKF Consulting found the lack of hotel projects a
sign that some major cities, like Atlanta, Houston and Los Angeles,
still are struggling to recover from the post-9/11 downturn in
travel.
“It is easier to find financing for a Marriott Courtyard than
for a full-service Hyatt downtown,” said Robert Mandelbaum,
director of research information services for PKF. “Market
conditions have to grow in order to justify building upscale
hotels.”
In cities such as Anaheim (Calif.), Miami and San Diego, where
demand is high but new hotels are scarce, planners will have a hard
time finding availability.
In New York City, according to a February study conducted by
Washington, D.C.-based PricewaterhouseCoopers, average room rates
will rise to $223.65 in 2005 and $244.79 in 2006, a growth rate
faster than in
any of the other top-25 U.S. hotel markets.
Long term, the crunch will ease. “A new construction boom is
ahead,” said Ford. “Big hotels take three to five years to
complete, so you are looking at 2009 before you see any real new
inventory.”