New York City Has More Than 10,000 Hotel Rooms in Construction
After 25 consecutive months of year-over-year declines, U.S. hotel construction increased slightly in December, according to pipeline data from STR.
At a market-level, New York City, Phoenix and Dallas 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.
US Hotel Pipeline
December 2022 (percentage change in comparison with December 2021):
- In Construction: 159,344 rooms (+0.3%)
- Final Planning: 213,066 rooms (+15.0%)
- Planning: 240,092 rooms (-15.6%)
“While the overall pipeline continued to contract year over year, December showed strength in the later phases of development,” said Alison Hoyt, STR’s senior director of consulting. “Over the past year, we’ve seen late-stage pipeline rooms consistently decline from 2021 levels, while rooms in the planning phase often showed double-digit growth. We started to see a change in this pattern in November, when final planning rooms significantly jumped year over year and planning rooms came down pretty firmly. The same occurred in December, with the only difference being construction increasing slightly over 2021. When looking strictly at volume, the in-construction phase has been fairly stable throughout the year, remaining under 160,000 rooms and showing month-over-month increases from July through October and again in December.”
When looking at the in-construction phase of the pipeline, luxury chains show the highest number of rooms as a percentage of existing supply.
- Luxury (5.3%, 7,241 rooms)
- Upscale (4.6%, 41,111 rooms)
- Upper Midscale (3.7%, 43,946 rooms)
- Upper Upscale (3.0%, 20,140 rooms)
- Midscale (2.5%, 10,766 rooms)
- Economy (0.9%, 6,482 rooms)
“Given the pricing power luxury chains have had over the past three years, it is no surprise the segments remain at the forefront in terms of projected growth,” said Hoyt. “The chain’s rapid room rate recovery and growth between 2020 and 2022 has led developers to push into the segment.”
NYC leads the major markets in rooms in construction as a percentage of existing supply.
- New York City (8.5%, 10,944 rooms)
- Phoenix (7.1%, 4,968)
- Dallas (5.0%, 4,877)
- Nashville (4.8%, 2,746)
- Detroit (4.7%, 2,192 rooms)
“Markets experiencing the highest number of luxury rooms in construction are those that performed well during COVID and/or are strong leisure destinations, with Fort Worth/Arlington, Texas; and New York City leading the list. While NYC also has the most rooms in construction as a percentage of existing supply, the market will likely see a slowdown after ongoing projects are built due to new development restrictions in place. Nashville is also showing signs of a slowdown, so we could expect a shuffle in the top pipeline markets later in 2023.”
Copyright 2023 CoStar Group. All rights reserved. From https://www.costar.com. By HNN Newswire.