September 2022 was the third consecutive month with an uptick in U.S. hotel construction, while year-over-year declines have been lessening each month since May 2022, according to STR.
At a market-level, New York City, Phoenix and Nashville are set to see the largest supply percentage increases from current construction. Among the chain scales, the Luxury and Upscale segments lead in that measurement.
U.S. Hotel Pipeline
September 2022 (percentage change in comparison with September 2021):
- In Construction: 156,861 rooms (-8.9%)
- Final Planning: 173,932 rooms (-15.5%)
- Planning: 282,225 rooms (+7.0%)
“There are plenty of concerns around the industry given the likelihood of a recession, but for most markets, new supply will not be an additional headwind in the short term,” said Alison Hoyt, STR’s senior director of consulting. “Even though the declines have slowed, activity is still down year over year, and the industry is 63,000 rooms below the construction peak from 2020. That places the possibility of new supply increasing competition further out on the horizon.”
When looking at the in-construction phase of the pipeline, luxury chain scales show the highest number of rooms as a percentage of existing supply.
1. Luxury (5.7%, 7,777 rooms)
2. Upscale (4.6%, 40,620 rooms)
3. Upper Midscale (3.5%, 41,422 rooms)
4. Upper Upscale (2.9%, 19,434 rooms)
5. Midscale (2.5%, 10,870 rooms)
6. Economy (0.9%, 6,206 rooms)
New York City leads the major markets in rooms in construction as a percentage of existing supply.
1. New York City (9.4%, 12,000 rooms)
2. Phoenix (6.6%, 4,558 rooms)
3. Nashville (5.6%, 3,181 rooms)
4. Detroit (5.0%, 2,343 rooms)
5. Miami (4.8%, 3,106 rooms)
“Limited-service continues to lead the national pipeline based on room count, but when you look at the numbers by percentage of existing rooms, it’s luxury hotels at the forefront,” said Hoyt. “That trend, however, does not correlate across the board when looking at individual markets. New York City, for example, shows in-construction economy hotels holding the highest percentage of existing supply at 37.2%. The market has been quite a comeback story over the last few months, achieving high levels in revenue per available room compared with other markets, thus remaining an attractive option to developers.”
STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.