Demand for U.S. hotel rooms will decline in the next two years, despite an increase in supply during the same period, forecasts Atlanta-based PKF Hospitality Research (PKF-HR) in a new study released last month."Because of the extended slowdown of the U.S. economy, compounded by the negative consequences stemming from airline capacity cutbacks, we are now forecasting a 0.2 percent decline in lodging demand in 2008, followed by another loss of 1.1 percent in 2009," PKF-HR President Mark Woodworth said in a statement. "According to data from Smith Travel Research, this is the first time since 1988 that the U.S. lodging industry will experience two consecutive years of decline in lodging demand."PKF-HR's predictions are part of the third quarter 2008 edition of Hotel Horizons, its quarterly forecast report for the U.S. lodging industry. Among other things, the report suggests that American hoteliers will have to rethink room rate increases in the next two years, pursue cost containment measures and delay new property development—all in the face of a projected decline of 3 percent in net operating income for the average U.S. hotel."The current credit crisis may be unfairly punishing developers with sound market and financially justified projects," Woodworth continued. "PKF-HR believes the existing restrictive financing environment will linger into 2009, thus delaying or preventing the start of hotel projects currently in the pipeline. Given the 12 to 24 month time needed to construct most hotels, PKF-HR projects a window of one to two years when the amount of hotel openings will be very limited."By 2010, PKF-HR concludes, lodging supply growth will be slowing but demand will once again be rising, growing by 2.2 percent in 2010 and 3.1 percent in 2011."Seven years since the terrorist acts of 2001—the primary event that led to the last low point in the U.S. lodging performance—a new, but familiar, set of circumstances is propelling the industry towards the next trough," Woodworth said. "Capital market turmoil is undermining asset values, a situation last seen in the late 1980s and early 1990s. The projected industry slowdown won't be as deep as the ones observed in 1981 or 1991, but it may take a little longer to fully recover."