Hotel Pipeline Grows 12% Year-over-Year

The number of hotel guestrooms under contract grew 11.7 percent between July 2016 and last month, reported STR, Hendersonville, Tenn.

In this context “under contract” means projects in the planning, final planning and in-construction stages, but not unconfirmed hotel projects.

STR Senior Vice President for Operations Bobby Bowers noted a continued “back-and-forth pattern” regarding the number of rooms in development from month to month. “The trend that has been easier to identify is the much lower rate of year-over-year growth compared with this time last year. Even with that slowing, supply is still growing at a healthy pace.”

But Bowers noted that hotel developers are starting to find it harder to obtain financing.

There are 188,734 rooms in 1,436 projects in the in-construction stage, STR reported. That represents a 10.2 percent increase year-over-year and a 1.0 percent lift from the previous month.

Among the largest markets, New York reported the most rooms Under Contract–26,990 rooms–and the most rooms in construction–14,714 rooms. Other markets with more than 15,000 rooms Under Contract included Dallas (20,851 rooms), Houston (17,355 rooms), Los Angeles/Long Beach (15,107 rooms) and Orlando (15,053 rooms).

“A majority of the major markets have seen supply grow above the long-term U.S. average,” Bowers said. “That makes demand growth that much more important in mitigating occupancy and rate decreases.”