Economy Watch: Hotel Pipeline Grows in April

Nearly 4,843 hotels were currently in process in the U.S. in April, according to a recent STR report, an increase of 15 percent from a year ago. Limited service hotels account for roughly two-thirds of all hotel construction in the country.

The Fairmont Austin Hotel under construction in Austin, Texas
The Fairmont Austin Hotel under construction in Austin, Texas

The number of hotel rooms under way in the U.S. increased nearly 15 percent in April compared to a year ago, according to hotel industry data specialist STR this week. Currently, some 4,843 hotels are in process, which will total 580,427 rooms if they’re all built. The STR total includes not only those under way, but also those on the drawing boards and those still unconfirmed.

It might seem like a leap, but in fact, the year-over-year increase is lower than this time last year, according to STR Senior Vice President of Operations Bobby Bowers. “While we won’t know for sure for another several months, perhaps we are seeing the beginning of a slowing development activity period,” he said in a statement.

“Limited service still accounts for roughly two-thirds of all hotel construction in the country,” Bowers added. “But the influx of new supply didn’t seem to upset upscale and upper mid-scale performance during the first quarter. Helped by the Easter calendar shift, room demand growth was the highest in those two segments.”

Despite representing the lowest number of rooms in the pipeline, the economy segment reported the largest percentage increase for rooms under contract (up 124.6 percent to 10,626 rooms). The upper upscale segment reported the largest percentage increase for rooms under construction (up 66.1 percent to 26,363 rooms).

Image via Wikimedia Commons user Fredlyfish4