Hotel Construction Slows, CoStar Reports

(Cover illustration: courtesy of Pixabay via Pexels)

The volume of U.S. hotel rooms under construction decreased year over year for the ninth consecutive month, according to CoStar Group, Arlington, Va.

Hotel rooms under construction fell 12.3% from September 2024 to 137,956 rooms, CoStar reported. Rooms in the final planning stage fell 3.5% to 258,836 and guest rooms in the planning stage dipped 2.6% to 327,304.

“More than 80,000 rooms below the peak from Q3 2020, construction fell to the lowest point of the past 40 quarters,” said Isaac Collazo, STR’s senior director of analytics. “Uncertainty often leads to inaction, and developers and financial institutions are still waiting for a more favorable environment. Higher building and material costs are also hampering groundbreakings, and we don’t foresee the cycle turning for some time.”

But Collazo noted there are more rooms under construction now than after the Great Recession. “Development is down but still happening,” he added.

CoStar calculated the following in-construction room count as a percentage of existing supply by chain scale.

1. Luxury (3.8% / 5,911 rooms)

2. Upper Upscale (2.1% / 15,292 rooms)

3. Upscale (3.6% / 33,376 rooms)

4. Upper Midscale (3.3% / 39,075 rooms)

5. Midscale (2.4% / 12,746 rooms)

6. Economy (0.7% / 4,559 rooms)