Hotels collectively earn more from adult pay-per-view movies than they do from mini-bars, laundry and room service combined. Of course, if you believe hotel guests, nobody has ever watched one. Anyone trying to make sense of the hospitality sector right now faces an equally vexing variance: hotels admit that occupancies in general have tanked — a 30% downturn say insiders — and yet talk to the manager of any individual property and they're doing just fine, thank you. It's always the other guy who has just lost the 3,000 rooms a year from Daimler or that big Siemens launch. Similarly, despite the inbox-clogging array of "seasonal offers", weekend deals, upgrades and extras, many hotels resolutely deny they are slashing tariffs.

Listen to the analysts though and things sound far more desperate. Jason Harris, director for hotel relations at BCD Travel, says rates could tumble by as much as 30% by 2010, compared with 2008, in some key cities, while Patrick Ford, president of Lodging Econometrics (LE), says: "It could be the middle of the next decade until 2008 levels of occupancy are reached again." And this assumes that the general economic conditions — not to mention the prevailing attitudes towards business travel — will embolden firms to pump up their punctured travel budgets. Christopher Hartley, CEO of Global Hotel Alliance, a marketing umbrella for several independent brands, sighs: "Our big worry is that once the recession is over, the pricing will not recover."

This leads to an even bigger issue: the sheer number of hotels in the pipeline, a consequence of the easy credit and giddy development environment of the last few years. In 2007 — when private equity group Blackstone orchestrated a leveraged buy-out of Hilton for $26bn — global hotel transactions topped $120bn. Hotel giants queued up to sell properties to real estate companies in return for management deals, which gave them annual fees and a slice of revenues. Property developers could not raise funds fast enough to market multi-use builds — shopping malls, golf courses, etc — topped with a reassuring hotel sign. The hospitality giants' collateral was their lifestyle brands.

Now the house of cards has collapsed. Jones Lang LaSalle reckons there will be a mere $12bn (€8.3bn) worth of hotel transactions this year, while Ford says construction has halted on an unprecedented number of ventures because "the capacity to borrow has diminished". He says the industry is in the middle of a "topping out formation". Nevertheless, it is as hard for a hotel giant to deviate from its course as it is a super tanker. Frits van Paasschen, Starwood's chief executive, for example, says this year the company will open 80 to 100 hotels, projects that were well advanced by the time the credit markets imploded. LE predicts that 2,774 hotels will still open this year — 41% in the US — and a further 2,428 are scheduled to open in 2010.

Yet the industry is planning way beyond the colour of next year's bed linens. In May, Four Seasons Hotels veteran CEO Isadore Sharp confirmed the company would double the number of its hotels from 83 within the next 10 years and its employees from 40,000 to 80,000. Starwood, whose portfolio includes St. Regis, Le Méridien and Sheraton, insists it is on track to increase its global portfolio by 40% over the next five years, with Simon Turner, global development president, cheerfully talking about "building, opening, converting, renovating and innovating for the recovery and beyond". Marriott, which manages the Ritz Carlton and Renaissance brands, plans to open 130 hotels in the next four years outside the US — half in China, India and the UAE. Marriot chief operating officer Arne Sorenson roused an industry conference in Berlin in March by whooping: "Within 10 years, one of us will have more than one million rooms in our system!"

So why, when cancellations and postponements rose for a fifth consecutive quarter — and with rack rates looking as quaint as chamber pots and cage elevators — are the hotel chains still in such an expansionist mode?

Well, firstly, markets are still opening up. The second largest hotel pipeline catchment (behind the US) is the Asia-Pacific region, where 4,918 skyward projects account for 20% of the world's hotels in development. This region includes three of the ten largest country pipelines: China, India and Thailand. Even though the increase in the number of rooms in China is down to large-sized hotels preparing for Expo 2010 in Shanghai, the country is projected to generate more than 100 million trips a year by 2020.

France's Accor plans to double the number of hotels under its management in China in the next few years, mainly through its mid-market brands and in second- and third-tier cities. Robert Murray, senior vice president for Accor's China operations, says the group hopes to manage about 180 hotels and 40,000 rooms in China by 2011. There is also a surge of large hotels set to open in Europe, mainly in Russia and the former CIS states, accounting for 10% of worldwide projects and rooms. Then there is Africa, particularly North Africa, and pockets of the Middle East.

The second reason is that with one billion people entering the middle classes in the global economy, the chains simply cannot afford to slow down. Take Rezidor, the Brussels-headquartered behemoth, whose portfolio runs from core brand Radisson Blu to the embryonic Missoni boutique chain and which is possibly one year away from overtaking Hilton as the biggest hotel company (by rooms) in Europe. The company's chief development officer Puneet Chhatwal, says: "Even though the market won't return for at least two years, it is suicide not to expand. In the midmarket, for example, you cannot stop at 30 properties. You need 300 to become a serious brand — to enjoy economies of scale and be able to pass these benefits to customers."

Chhatwal says that 55% of Rezidor's future growth will come from Russia and the CIS states, the Middle East and Africa. In the last two years Rezidor has tripled its African portfolio, adding 18 hotels in countries such as Egypt, Ethiopia, Kenya, Libya, Morocco, Mozambique, Senegal and South Africa. This represents an investment in new hotels in Africa of around $800m (€555m), excluding the second Missoni, which will open in Cape Town in 2010 — just in time for the FIFA World Cup tournament. Rezidor's global strategy is fairly typical for the industry: it aims to brand and manage 75% of its hotels, to franchise a further 15% and to own outright the remaining 10%, some of which may come by picking up "distressed assets in Europe".

The opportunity to scavenge is the third reason the hotel giants are so gung-ho. Every single group believes the recession will bring further consolidation — a euphemism for bankruptcies — and they all believe they can be the ones to profit from the woes of independent operators and smaller chains. As Oliver Bonke, vice president sales and marketing for Starwood, shrugs: "Okay, it doesn't look good for us if a developer goes under and there is a half-finished building somewhere with a huge Sheraton sign hanging on it. On the other hand, we are well capitalised so the economic downturn could enable us to buy a smaller chain on the cheap."

But the established global players will increasingly find rivals in the form of "local players" who are also investing in the future. Take India's The Leela Palaces, Hotels and Resorts, which is frenziedly planning mid-market hotels in Chennai, New Delhi, Agra, Hyderabad and Pune, to capitalise on India's growing number of high-end business and leisure travellers. Leela president Onno Poortier, says his company has the edge over the Western chains, such as France's Accor, planning a major assault on the Indian market, because of the in-depth knowledge of Indian hospitality. He says: "We are creating the ‘essence of India' in our hotels, i.e. the soft touch of being in India." Poortier says, once the Leela Brand is firmly established in India, "we might consider overseas management contracts".

Already expanding westward is compatriot Taj Hotels Resorts and Palaces, aggressively adding to the 64 hotels in 45 cities throughout India and the 16 international hotels it has in the Maldives, Mauritius, Malaysia, Australia, the UK, the US, Bhutan, Sri Lanka, Africa and the Middle East. The Tata company is now spending $65m (€45m) on a hotel in the business district of Cape Town, the first of a number of hotels for South Africa, with others planned in Johannesburg and Durban.

Several Asian players have big plans, including Hong Kong-headquartered group Langham Hotels International, which has just opened the Yangtze Boutique, Shanghai, and Swire Hotels, which is soon opening the 117-room Upper House in Hong Kong and plans to open East, a 345-room property there in January, 2010. Also planned for next year is Swire Properties' Taikoo Hui, Guangzhou, a mixed-use property project that includes a hotel project for the high-end Hong Kong-based Mandarin Oriental Group.

Mandarin Oriental is ramping up its European and US presence, opening in Las Vegas in December and in Paris in 2010, a destination that Singapore-based Shangri-La Hotels and Resorts has settled on for its first European hotel foray before docking at London Bridge. According to Christoph Mares, Mandarin Oriental's operations director, the Asian company is also looking at opportunities in Abu Dhabi and Oman. Mares says that spas are regarded as a "key competence" of Asian hospitality and one which puts Mandarin Oriental in a strong position in the West.

Another ambitious hotel company is Dubai's Jumeirah Group, which has 14 hotels under construction and says it is on course to hit a target of 60 hotels under management by 2012. As well as four management agreements in China, Jumeirah also quietly struck deals in the US Virgin Islands, Costa Rica and Argentina.

Latin America on the whole, meanwhile, is benefitting from the general undersupply of hotels. Barcelona's Meridia Capital has been discreetly snapping up hotels in underexploited cities such as Santiago, Chile, and it is also targeting São Paulo and Rio de Janeiro. Bogota, Colombia-based GHL Grupo Hoteles plans to open seven hotels in Colombia, Chile and Peru in the next year. In addition, Brazilian giant Atlantica Hotels began building three new projects in January and claims it is still on target to build 10 properties a year. Brazil accounts for a third of the Latin America pipeline, with 193 projects comprising 32,819 rooms as of year-end 2008, LE reports.

Meanwhile, following a huge restructuring, South Africa's Protea — which owns African Pride, the outfit with luxury properties in South Africa, Kenya and Namibia — promises openings throughout the region over the next few years.

Rates and occupancy may be shrinking right now for the hotel industry, but the rewards, and the competition, are set to explode.