Extra Room at the Inn as Hotel Biz Slows Down

Demand may be checking out as new rooms keep opening
By Rob Quinn,  Newser Staff
Posted Mar 19, 2008 10:34 AM CDT
An expected fall in occupancy rates will be bad news for people who invested in "condo-hotel" rooms - hotel rooms that get sold off one at a time.   ((c) Aaron Gustafson)
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(Newser) – The hotel business is heading for a downturn just as thousands of new rooms are about to open, the Wall Street Journal reports. One expert sees a .9% fall in demand for hotel rooms this year as the slowing economy keeps travelers at home—the first significant slump since 9/11.  At the same time, as many as 260,000 new hotel rooms are slated to come on line this year and next—a 4.6% increase in supply.

"When you put together the supply-and-demand numbers, it's kind of scary," he says. The result is likely to be a decline in revenue per room across the industry—not big trouble for chains like Intercontinental, who can offset a fall in per-room income by building more rooms, but it could mean tough times for boutique hotels and losses for investors in condo-hotel projects.