Hotel Construction Declines for Third Consecutive Month

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The number of U.S. hotel rooms under construction decreased year-over-year for a third consecutive month, according to CoStar, Washington, D.C.

There are currently 144,760 hotel rooms under construction in the U.S., down 7.5% from a year ago, CoStar reported.

“With increased uncertainty and the potential for rising construction costs, it is not surprising that fewer projects have broken ground,” said Isaac Collazo, senior director of analytics at STR. “The number of hotels under construction is down 103 versus a year ago, meaning most markets are seeing one less hotel in the final phase of the pipeline.”

But hotel rooms in the final planning stage increased 3.7% to 273,068 rooms and guest rooms in early planning increased 10.9% to 359,878. Collazo noted the overall pipeline remains robust, totaling 6,500 hotels with 777,000 rooms when planned properties are included. “We’ll be watching those planning phases closely because those are where economic uncertainty is most likely to be impactful. Projects already in construction are going to be completed regardless,” he said.

CoStar said upper-midscale hotel properties lead the pipeline in terms of rooms, with 38,217 rooms under construction. Upscale properties follow with 35,082 rooms under construction, followed by upper-upscale (18,813 rooms), midscale (13,883 rooms) and economy with 5,933 rooms in the construction pipeline.

“The construction decline was concentrated in upper-midscale, which accounted for more than a third of the difference in room count and slightly more in the number of hotels versus a year ago,” said Collazo. “Even with the decrease, upper-midscale makes up the largest number of hotels and rooms under construction.”