U.S. Hotel Room Construction on the Decline

The number of hotel rooms under construction in the U.S. has declined or remained flat year over year for the three consecutive months, according to pipeline data from STR.

Overall, there were 179,979 rooms in construction across 1,400 hotels in December. The number of rooms represented a 3.7% decrease compared with the same month in 2016. That decline followed a flat November (+0.6%) and October (-0.1%), and was the largest year-over-year room construction decrease in the U.S. since September 2011 (-7.8%).

“We’ve seen three months in a row where construction numbers either decreased or remained flat, and we feel we can now call that a trend,” said Jan Freitag, STR’s senior VP of lodging insights. “A construction decline obviously bodes well for the current industry cycle. It appears that financing is becoming harder to obtain, and if demand growth holds, occupancy will not deteriorate as quickly or as much as anticipated.”

New York, New York, remained the construction leader in the U.S. with 12,074 rooms being built across 69 hotels. Two additional Top 25 Markets reported more than 5,000 rooms in construction: Dallas, Texas (5,768 rooms in 45 hotels), and Nashville, Tennessee (5,028 rooms in 33 hotels). Of those three markets, only Nashville showed more construction activity than this time last year.

STR provides clients from multiple market sectors with premium, global data benchmarking, analytics and marketplace insights. Founded in 1985, STR maintains a presence in 10 countries around the world with a corporate North American headquarters in Hendersonville, Tennessee, and an international headquarters in London, England. For more information, please visit str.com.