STR: Hotel Pipeline Shows Confidence in Business Travel
Hotel developers show confidence in upper-upscale properties despite the segment’s slow recovery from the COVID downturn, reported STR, Hendersonville, Tenn.
Generally associated with business travel, the U.S. hotel development pipeline includes a healthy number of upper-upscale hotels. The volume of projects in the segment points to confidence in the future of business travel, STR said.
“Upper-upscale saw the slowest recovery, but a steady climb in performance and the business travel indicators have supported developer confidence in the segment,” said Isaac Collazo, STR Vice President of Analytics. He calculated more than 23,000 upper-upscale rooms in construction right now, or 3.4% of the segment’s existing supply. “That is well above the long-term growth average in the U.S.,” he said.
The U.S. hotel pipeline in March included:
• In Construction: 154,284 rooms (down -0.5% from March 2022)
• Final Planning: 239,995 rooms (up 34.6% from March 2022)
• Planning: 232,517 rooms (down 21.6% from March 2022)
The overall number of hotel rooms in construction fell slightly in March after three consecutive month-over-month increases, STR reported. This aligns with patterns in previous years.
Among the hotel segments, luxury shows the highest number of rooms as a percentage of existing supply.
1. Luxury (5.2%, 7,136 rooms)
2. Upscale (4.1%, 36,089 rooms)
3. Upper-Midscale (3.7%, 43,470 rooms)
4. Upper-Upscale (3.4%, 23,564 rooms)
5. Midscale (2.1%, 10,363 rooms)
6. Economy (1.0%, 6,302 rooms)
“Luxury, though the smallest in terms of room count, shows the highest projected growth against existing supply, matching the rate gains experienced in the segment over the last few years,” Collazo said. “Select-service (which includes upper-midscale and upscale assets) continues to grow as well, which is no surprise given how well the segment of the market has regained demand. The upper tier of select-service also caters to the business traveler.”