NEW YORK CITY is seeing a surge in hotel rooms under construction and in projected openings for the rest of 2021, according to STR. The Big Apple’s pipeline is well ahead of other U.S. cities, possibly leading to issues of exceeding demand.
New York had 21,878 rooms in construction as of July 1, according to STR’s AM:PM platform. More than 5,000 rooms in the city are in the final phase of the pipeline.
The top five markets for hotel room construction are:
- New York (21,878 rooms)
- Los Angeles (6,595 rooms)
- Atlanta (6,398 rooms)
- Las Vegas (5,031 rooms)
- Dallas (5,028 rooms)
Also, more than 8,500 rooms under construction in New York are scheduled to open over the rest of this year, bringing the total for the year to more than 11,400. The next closest market for remaining 2021 openings is once again Los Angeles, with the top five markets for openings for the rest of the year being:
- New York City (8,570 rooms)
- Los Angeles (2,902 rooms)
- Austin (2,437 rooms)
- Atlanta (2,337 rooms)
“New York City is positioned for a post-COVID supply boom,” said Carter Wilson, STR’s senior VP of consulting. “The market has the largest number of in-construction projects along with the highest number of temporarily closed hotel rooms. As all this supply enters and re-enters the market, it’s definitely going to add pressure to recovering occupancy levels.”
The U.S. altogether had 188,929 rooms currently in construction, down roughly 32,000 from the country’s all-time construction peak of 220,207 rooms in April 2020. There were 265,235 rooms in the planning phase and 200,978 rooms in final planning.
“While the number of rooms under construction continues to decline year over year, those in final planning have actually increased for two consecutive months,” Wilson said. “The same is true for rooms in the planning stage, although rooms in this phase are the least likely to reach fruition. The Federal Reserve has set a soft date for interest rate increases, so developers looking for low rates may push for loans over the next two years.”
In May, Lodging Econometrics reported that the U.S. hotel pipeline took a slight dip in the first quarter of the year, dropping from 5,216 projects with 650,222 rooms at the end of 2020 to 4,967 projects with 622,218 rooms at the end of the quarter.