Business travel may be strong again, but 2005 was a slow year in the hotel-building business--at least in the U.S., that is. In booming economies, such as those in China or India, however, new luxury hotels are going up faster than you say "low manufacturing costs."
"We are seeing the pipeline, or the planning and construction stage for new hotels, at a historic low this year," says Jan Freitag, vice president of Hendersonville, Tenn.-based Smith Travel Research. Across the country from October 2004 to October 2005, only four hotels opened in the luxury segment, which includes brands like Four Seasons Hotels and Resorts (nyse: FS - news - people ), Marriott (nyse: MAR - news - people )-owned The Ritz-Carlton and InterContinental Hotels Group (nyse: IHG - news - people ). (That is down from six property openings in 2004.)
In the next category down, which includes brands such as Hilton Hotels (nyse: HLT - news - people ) and Hyatt, only 22 hotels opened. And in the upscale segment, which includes Intercontinental-owned Crowne Plaza and Carlson Companies-owned Radisson Hotels & Resorts, 124 openings were recorded. While these numbers beat last year's, the overall year-to-date hotel-room supply increase of just 0.4% is low compared with the historical average of 2.2%.
"It's good news for existing hotels, since they benefit from an increase in demand. For the consumer, it's not so great," says Freitag, because hotels can charge higher room rates. And there's always the danger that the property you want will be sold out.
Analysts blame the sluggish pipeline on a shortage of prime urban locations left for development, as well as on unpredictable construction costs. Steel and cement are currently being consumed at a high rate by China, which increases the cost for everyone else. And in the U.S., large amounts of raw materials are being allocated to New Orleans for rebuilding efforts, Freitag speculates.
So if hotels are opening at a slow rate in the U.S., are they opening overseas instead? The answer is yes, but it's unclear exactly how many. "There are several reasons why these data are not available," says Bjorn Hanson, global hospitality expert with PricewaterhouseCoopers in New York City. "In many parts of the world there are simply not sources that compile the data. Real estate, hotel or construction companies are not as accustomed to sharing these data as they are in North America. Finally, gathering the data is very time consuming and challenging: Projects are announced that are never completed, and it would involve interviewing multiple local officials, local, regional and national developers, hotel companies and many others."
"I doubt anyone can speak with authority about this number, since even the definition of what constitutes a hotel is unclear when you leave the U.S.," says Freitag.
Nevertheless, we know a first-class business hotel when we see one. That is why seven of the hotels on Forbes.com's list of the Best New Business Hotels 2005 are international.
When compiling our list, we looked for major international hub cities. The hotels had to be fresh out of their scaffolding: Most were opened in the second half of 2005. They also had to be located near the city center or financial district and in close proximity to excellent dining options. Finally, their business facilities had to be above-standard, with Internet access in all rooms, meeting space and a dedication to serving business travelers. The Intercontinental Financial Street in Beijing even has a "technical concierge" on hand.