Industry Update
Opinion Article11 May 2015

U.S. Supply Growth in Check with Demand

By Susan Furbay, Vice President Business Development at HVS

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Years of rising average daily rates and demand, among other factors, have made the ground fertile for new hotel supply. How will the growing pipeline of new hotels impact hotel markets in the near term? The U.S. hotel industry has reaped sizable benefits from the remarkable growth in the U.S. since the Great Recession. Nationwide lodging demand has been up year after year. RevPAR growth in 2014 was one of the highest on record, and demand across all chain scales shows every sign of accelerating in 2015. This is particularly true for urban gateway markets, where high demand for rooms allows owners to raise rates, thus improving this year's bottom lines. Increasing demand, improving operating and performance metrics, and favorable financing terms have led to the recent (and anticipated) surge in new hotel supply. The chart below shows the number of rooms in the U.S. (as of March of 2015) and percentage of the total per chain scale.

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U.S. Supply Growth in Check with Demand

Years of rising average daily rates and demand, among other factors, have made the ground fertile for new hotel supply. How will the growing pipeline of new hotels impact hotel markets in the near term?
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