PKF Reports Industry’s Prosperous Supply-Demand Imbalance Could Be Nearing End

ATLANTA— According to a study by PKF Hospitality Research, the fundamentally strong supply-demand relationship that has buoyed the hotel market during the past few years could be coming to end, as demand has begun to decrease and supply is expected to jump in the near future. The PKF study based this forecast on, among other things, the fact that Smith Travel Research reported declines in demand levels in 12 of the top 24 U.S. hotel markets in 2006 and the first quarter of 2007 as well as its published study, the Hotel Supply Conundrum, which suggests that the hotel industry could be in for a wave of new construction projects. Furthermore, the number of hotel projects that have entered the final-planning or under-construction stages more than doubled during 2006 and an estimated 200,000 hotel rooms are projected to be under construction by 2008. In comparison, during the previous hotel construction peak in 1999, 150,000 rooms was the highest total recorded.