* Sees unprecedented drop in active pipeline
* Lack of financing for hotels reason behind drop
NEW YORK Aug 14 The number of U.S. hotel
projects in development fell 26 percent in July, another
illustration of how the financial woes of the industry have
curbed growth, Smith Travel Research data showed this week.
"That is a drop that we haven't seen since we started
tracking ...," said Jan Freitag, vice president of global
development at Smith Travel, which started following the
lodging pipeline in 2002.
The number of hotel projects under construction or in
initial or final planning stages fell to 4,554 hotels in July.
Smith Travel only includes hotels with 15 rooms or more in its
That drop is due to weakness in the hotel industry, which
leaves banks and investors reticent to finance the building of
a hotel, Freitag said.
Major hoteliers, including Marriott International Inc
MAR.N and Starwood Hotels & Resorts Worldwide Inc HOT.N cut
their full-year earnings outlook last month amid expectations
of sluggish demand. [ID:nN16395325] [ID:nN22334389]
Revenue per available room, a key gauge of fiscal health,
is off 16.1 percent so far in the third quarter, according to a
recent data analysis by Susquehanna analyst Robert LaFleur.
"The rapid deterioration in RevPAR makes it not as
attractive," Freitag said.
But another major factor in the decline is investors'
reticence to tap into the commercial mortgage-backed securities
market, which helped finance the building and acquisition of
hotels in boom times.
"A lot of hotels and real estate was securitized in the
CMBS market," Freitag said. "Nobody wants to touch the same
securitizing vehicle now."
(Reporting by Deepa Seetharaman; editing by Andre Grenon)