Hotel Sector Pipeline Increases

There are currently nearly 600,000 hotel rooms under contract to be built in the United States–up 8.8 percent compared to a year ago–reported STR, Hendersonville, Tenn.

“Under contract” includes hotel projects in the planning, final planning and in-construction stages, but not the unconfirmed stage.

The U.S. has 192,132 hotel rooms in 1,463 projects in the in-construction stage, a 12.9 percent increase in rooms under construction year-over-year, STR said.

“In-construction and final planning activity was up a bit from the previous month, but we did see a drop in the planning phase,” said STR Senior Vice President of Operations Bobby Bowers. He called the figures “incredibly low” compared with the same time last year, “and there is potential for further deceleration in new development as resources are directed to rebuilding from Hurricane Harvey and Hurricane Irma,” he said.

Lodging Econometrics, Portsmouth, N.H., said the markets with the largest hotel construction pipelines include New York with 190 projects with 31,923 rooms, Houston with 159 projects with 17,472 rooms, Dallas with 147 projects with 18,429 rooms and Nashville, Tenn. with 125 projects housing 16,697 rooms.

Dallas will likely have the most new hotel openings this year with 42 hotels with 5,029 rooms scheduled to open, followed by New York’s 38 hotels with 5,657 rooms scheduled to open, Lodging Econometrics reported.

Lodging Econometrics said the “upper-midscale” property category has the largest project count in the construction pipeline with 2,060 projects and 205,270 rooms underway. Next is the “upscale” category, which has 1,258 projects that total 162,609 rooms. These two categories comprise more than two-thirds of all projects currently in the pipeline, LE said.

“The upper-midscale and upscale segments remain the most popular across the three phases of under contract,” Bowers said. “Those are also two chain scale segments that saw occupancy declines and the lowest rate growth through the first seven months of the year. Demand remains high in the select-service segment, but significant supply growth will continue to pressure performance levels.”

Despite representing the lowest number of rooms in the pipeline, the economy hotel segment saw the largest year-over-year percentage increase for guest rooms in construction, with a 68 percent jump to 2,498 rooms, STR said.