STR: US hotel construction up 10% in April

STR, a data provider for the global hospitality sector, has reported that pipeline data for the US showed 1,575 hotel projects accounting for 203,890 rooms in construction as of April 2019.

In 2018, year-over-year construction decreases were common. Today, the industry reported seven consecutive months of growth beginning with October. The 9.9% rise in April was the highest for any month since August 2017.

According to the group’s data, this figure represented a 9.9% year-over-year increase in the number of rooms in the final phase of the development pipeline.

“An ongoing acceleration in construction activity”

“There has been an ongoing acceleration in construction activity, and even though the national total is still more than 7,000 rooms below the previous construction peak in 2007, this is a situation worth watching,” said Jan Freitag, STR’s senior VP of lodging insights.

“The level of supply growth focused in the limited-service segments and in the major markets is applying more pressure on occupancy levels and room rates. Those operating in those segments or markets are seeing even greater challenges in maintaining their profitability.”

A majority of the country’s construction activity continues to be focused in the upper midscale and upscale segments, while upper upscale projects represented the largest percentage increase in activity year over year.

1.    Upper Midscale: 67,495 rooms (+4.5%)
2.    Upscale: 61,347 rooms (+4.9%)
3.    Upper Upscale: 24,543 rooms (+12.2%)

Five markets reported more than 6,000 rooms under construction. New York led with 13,976 rooms, which represented 11.3% of the market’s existing supply, followed by Las Vegas (8,247 rooms, 5.0% of existing supply).

1.    New York: 13,976 rooms (11.3%)
2.    Las Vegas: 8,435 rooms (5.1%)
3.    Orlando: 7,310 rooms (5.7%)
4.    Dallas: 6,438 rooms (7.1%)
5.    Los Angeles/Long Beach: 6,113 rooms (5.8%)