Development Pipeline for New Hotels Throttles Ahead Remarkably to Record Highs — For Now

The U.S. hotel supply continues to grow at a record pace, even with the industry facing its worst downturn in recorded history. But the building boom's days are numbered.

Many hotels around the world are temporarily closed due to the coronavirus downturn in travel. But looking at hotel construction sites around the U.S., you wouldn't know the worst economic blow to the industry is underway. The number of U.S. hotel rooms under construction hit a record high of 215,000 in March, according to STR. The record was again eclipsed in April — the first full month of widespread travel restrictions in the U.S. — when the number swelled to 220,000. Eventually, the pandemic will catch up with hotel development, STR Senior Vice President of Lodging Insights Jan Freitag said.

"I think this is going to deteriorate," he added. "We will not see a rapid acceleration, but it's going to come down."

Hotel executives like Marriott CEO Arne Sorenson used first quarter earnings calls to recognize coronavirus has been the worst downturn for the hotel industry in recorded history. But Sorenson also said he felt the worst of the pandemic and ensuing business downturn was in the past and that there were early signs of a recovery. Even STR shows U.S. hotel occupancy rates ended the week of May 16 at a little more than 32 percent, the fifth consecutive week of increases and an improvement from the early days of the crisis when some hotels were posting single-digit occupancy rates.