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Wake-up call: demand for hotels in Marcellus dropping

Shane Thielges | Shale Plays Media

The rapid onset of the U.S. shale boom sent cities nationwide scrambling to respond to sudden, often overwhelming population increases.  In regions like the Bakken, companies are still flocking to meet growing demands for food and housing. At least one state, however, is starting to realize its response was an overextension.

Pennsylvania has too many hotels.

A Penn State study has concluded that demand for temporary housing, which rose sharply with the influx of gas workers to the state, has fallen sharply, phys.org reports. That means the occupancy rates of state hotels have fallen sharply, threatening to drive many out of business.

“Demand is still high in many of the counties in the Marcellus Shale region, but the occupancy rate is starting to come down,” said Daniel Mount, an associate professor in hospitality management. “The case could be made that this is a sign that hotels were overbuilt.”

During the peak years of Marcellus shale development, 65 hotels were built in drilling regions – well above the natural average. At least 14 have closed since then, and the study concluded that more could follow if demand drops any lower.

Older hotels, especially those that aren’t part of a franchise, will be more likely to shut down. The average age of the 14 closed hotels was nearly 40 years old.

Some analysts have warned of a bust that will follow the shale drilling boom, leaving economic hardships and lost jobs in areas transformed by drilling. Critics of this theory say the shale industry is in no danger of ending anytime soon.

Head to phys.org for more: Marcellus drilling boom may have led to too many hotel rooms

Related: Hotels a sign of gas industry’s impact on area’s residential development

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