THE HOTEL PIPELINE in Houston, Texas, took a dive in September, reports STR.
The data shows Houston, ravaged by flooding caused by Hurricane Harvey in late August, has 16,266 rooms under contract, a 15.3 percent drop from September 2016.
The decline in hotel construction in Houston and other markets might steepen as STR gathers more data in hurricane-affected areas, said Bobby Bowers, senior vice president of operations at STR.
Harvey was followed by Hurricane Irma in Florida and Hurricanes Jose and Maria, which devastated Puerto Rico. The 2017 Atlantic hurricane season is now among the top 10 all-time most active seasons on record, reports Weather.com, which charted eight hurricanes from mid-August through September.
Overall, the September pipeline for the U.S. hotel industry shows more than 585,000 rooms in more than 4,880 hotel projects under contract, a 6.6 percent increase in the number of rooms under contract compared with September 2016.
Also experiencing a decline in in-construction projects is New York, where STR charted a 17.8 percent drop. Still, the city remained tops in the number of rooms under contract (25,607) and in construction (13,533).
Under-contract data includes projects in the in-construction, final-planning and planning stages, but does not include projects in the unconfirmed stage.
In the in-construction stage in the U.S., STR charted a 5.7 percent increase – 188,479 rooms in 1,440 projects.
“The overall room-construction total was down from last month, but outside of Houston, there wasn’t a noticeable decline in activity around hurricane-affected markets,” Bowers said. “There is still potential for that to change in next month’s reporting if damage to existing sites and increased material costs continue to remain a challenge.
“Regardless, construction activity and the total pipeline remains up year over year – just at a lot lower rate of growth compared with 2016.”
Besides New York and Houston, three other markets in STR’s Top 26 reported more than 15,000 rooms under contract: Dallas, Texas (19,312 rooms); Orlando, Florida (16,368 rooms); and Los Angeles/Long Beach, California (15,023 rooms).
After New York, three other markets reported more than 5,000 rooms in construction: Dallas (7,047 rooms); Nashville, Tennessee (5,497 rooms); and Las Vegas, Nevada (5,125 rooms).
“The impact of new supply coming online is already visible in occupancy rates among the major markets,” Bowers said. “Demand in those markets continues to grow at a healthy clip as well, but not enough to lift hotelier pricing confidence.”