by Calculated Risk on 11/04/2008 10:55:00 AM

A couple of stories ...

From the Birmingham Business Journal:

In projections for 2010, national hotel research firm Smith Travel Research predicts hotels will see a decline in occupancy rates over the next two years ... The firm expects occupancy to drop 3 percent to 61.2 percent by the end of 2008, compared to last year, and said it will slip even further to 58.7 percent by 2010.

And from SignonSanDiego.com: Hotel occupancy rates crater in Hawaii

Almost 40 percent of the state's hotel rooms languished empty in September, the highest rate since the Hawaii tourism downturn in the aftermath of the Sept. 11, 2001 terrorist attacks, a research firm said Monday.

Average statewide hotel occupancy plunged 11 percentage points to 63.2 percent from 74.2 percent the same month a year ago, research firm Hospitality Advisors said in a report.

While the weakening economy is pushing down occupancy rates, a large number of new hotel rooms are still being added.

Click on graph for larger image in new window.

This graph shows construction spending on lodging (seasonally adjusted annual rate in millions) through September - based on the details in the Census Bureau Construction Spending report released yesterday.

Lodging saw an incredible increase in investment over the last few years.

Falling demand and increasing supply - not a good environment for new hotel investment - and I expect we will see a sharp decline in investment over the next couple of years.