Thanks to demand outside the U.S., the global lodging industry is finding traffic remains strong for high-end hotels. If you pay attention to headlines or the lead items on the nightly news, it would be easy to conclude that the sky was falling, at least economically. Combine this doom-and-gloom talk of a recession with the well-documented problems of the airline industry, and it would be natural to conclude that the lodging business would be equally afflicted.

But the numbers don't bear this out.

Commerce Dept. figures show growth in gross domestic product of 0.9% for the first quarter, while a recession is usually defined as two straight quarters of GDP decline. And the lodging industry is projecting almost identical growth figures for 2008.

Not Quite So Dire

Of course, if you've just experienced a swingeing mortgage-rate reset or are having trouble filling the tank on your SUV, none of this cuts much ice. But in the bigger scheme of things it does suggest that conditions might not be as dire as some people claim.

On June 2, J.W. Marriott Jr., chairman and CEO of Marriott International (MAR)—owners, in addition, of the high-end Ritz-Carlton chain—said in a speech that the company's international lodging business continued to be strong but that softer demand trends were affecting the U.S. market. He added that "the company is likely to report second-quarter North American RevPAR [revenue per available room, the standard gauge of hotel performance] growth of approximately 2%, compared with prior company guidance of 3 to 5%."

So, there are slowing rates of growth rather than an actual decline.

Similar numbers are projected for the industry as a whole. Bjorn Hanson, a consultant at PricewaterhouseCooper's, forecasts that for 2008 demand will grow 0.8% domestically, compared with an average over the last 25 years of 2.2%. On the supply side he sees growth of 2.2% leading to pricing pressure, and it is this imbalance that is attracting concern because it will lead to a decline in occupancy.

Long, Long Lag in Lead Times

This points up a perennial problem faced by the hotel business: The delay between the perceived need for additional rooms and their coming on line is so great that by the time they do appear, the economic cycle has often turned, with supply once again exceeding demand. It is this imbalance that leads to much of the volatility in the business.

According to a report from Smith Travel Research in Hendersonville, Tenn., supply of rooms will grow at an average annual rate of about 2% for 2007-09. These are rooms that were planned during the boom years of the mid-2000s. Now, with demand softening—the same report projects only 1.2% over the same period—there will be pressure on rates and consequently revenue.

The effect of this shifting balance won't be felt immediately because corporate rates for any year are negotiated in the fall of the previous year, but it is coming.

There are, however, some encouraging signs for the industry. A representative of a large international hotel group who wished to remain anonymous says that, while growth in domestic demand was slowing, this was compensated for by a healthy increase internationally, projected at 4% in 2008. This explains the dramatic increase in new high-end business hotels being built in the Middle East and Asia. Ah, the advantages of international diversification.

Not Much Room at the Top

In addition, she says demand for the most expensive rooms and suites is still robust, that these are the first rooms to be booked and the ones that generate the most revenue.

Bobby Bowers, senior vice-president of consultants STR Global, sees a similar trend, pointing out that the higher end of the industry seems to be holding up better than the lower end.

He also adds some historical perspective by observing: "If you look back at the last downturn, in 2001-02, that was far more cataclysmic. You basically saw the floor drop out from under the industry, especially the expensive end. Very few people I've seen have forecast actual declines for 2008."

This guarded optimism is echoed by PwC's Hanson who believes that "there is no doomsday scenario out there, even among people who would like to find reasons to be different from our forecasts."

So if you were counting on the current economic difficulties to deliver deep discounts for your next trip to Denver or Dubai, you will most likely be disappointed. But that doesn't mean there hasn't been an array of spectacular new business hotels opening in the past year for you to enjoy, and we highlight 10 of the best in the accompanying slide show.

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