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STR: Downward trend in U.S. hotel construction continues in June

New York City leads the major markets in rooms in construction

STR: Downward trend in U.S. hotel construction continues in June

U.S. HOTEL CONSTRUCTION declined for the seventh consecutive month in June, according to STR. Rooms in construction in New York City and Nashville represent a significant percentage of existing supply in those markets.

Though at a slower pace, planning activity increases across the U.S. and developers are showing interest in  Miami, Nashville and Phoenix, the report said.


According to STR, there are 146,198 rooms under construction in the U.S. in June, down 20.1 percent when compared to same period last year. As many as 178,809 rooms are at final planning during the month, decreased 11.3 percent from last year and 281,190 rooms are at planning phase, an increase of 6.1 percent from June 2021.

“The U.S. hotel pipeline continues to decelerate as we enter the second half of the year,” said Carter Wilson, senior vice president of consulting, STR. “The continued increases in debt costs combined with the ongoing supply chain disruptions will likely delay projects from breaking ground this year, which will lead to a further decline in rooms in construction. On a national basis, new supply will not be a significant headwind for the future.”

New York leads the major markets in rooms in construction at 13,568 rooms in June, up 10.8 percent compared to last year, followed by Nashville with 3,939 rooms, up 7 percent, Phoenix with 4,388 rooms, an increase of 6.3 percent over last year, Atlanta with 5,991 rooms, up 5.5 percent and Detroit with 2,382 rooms, an increase of 5.1 percent over June 2021.

Miami has the highest number of rooms at the planning stage with 10,177 rooms for the month, up by 15.8 percent over last year, followed by Nashville with 6,295 rooms, up  11.2 percent, Phoenix with 6,990 rooms, an increase of 10.1 percent compared to last year and Los Angeles with 9,414 rooms, an increase of 8.3 percent over last year.

“The national slowing in the pipeline does not translate to all markets equally,” added Wilson. “Certain markets that have seen sustained demand are still very attractive to developers and the corresponding pipeline numbers prove that point. New York City continues to be at the top of the list with roughly 14,000 rooms in construction, while markets such as Nashville are experiencing a large increase in luxury hotels. And even markets where the recovery is uneven, such as in San Francisco or Chicago, developers are finding submarkets that they hope can support new rooms.”

According to STR, each of the four world regions showed a year-over-year decline in hotel pipeline activity at the end of the second quarter.

The U.S. holds the majority of rooms in construction in the region, followed by Mexico (14,909) and Canada (7,232). The total under construction rooms in the region are 739,777 during the period, down 5.8 percent from last June.

There are 202,250 hotel rooms under construction in Americas in June, down 16.9 percent from June 2021. As many as 208,583 rooms are under final planning, dropped 14.4 percent over last year and 328,944 rooms are at planning phase, an increase of 10.4 percent when compared to last year.

In April, Lodging Econometrics reported that the U.S. hotel construction pipeline rose 2 percent by projects in the first quarter of 2022 but was down 3 percent by rooms.

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