US hotel construction surge to add 103K new rooms in 2016

Dive Brief:

  • Hotel research firm STR reports that at least 865 hotels, with 103,230 rooms, are under construction in the U.S. and scheduled to open in 2016, USA Today reported. The hotel construction boom is being driven by increasing demand.
  • STR Senior Vice President of Lodging Insights Jan Freitag told USA Today that the 1.5% increase in new rooms this year is below the long-term annual average of 1.9%, but there are 21% more rooms under construction than there were a year ago. Limited service hotels, according to Hilton Worldwide’s Bill Fortier, make up the majority of what's being built today. 
  • Chicago, Washington, DC, and Detroit have all seen increased hotel building this year, but the definitive winner for most units under construction, according to Freitag, is New York, with 13,853 rooms scheduled to open in 2016. Through November, 2015 hotel occupancy in the city was 84.8%, the highest annualized occupancy of the nation’s top 25 lodging markets, making New York attractive to investors.

Dive Insight:

"Post-2009, lenders in the hotel space got very skittish," Freitag told USA Today, but "the industry continues to break records on the demand side and on the revenue side. Developers are playing catch up, and we’re seeing a lot of attention on the U.S. lodging industry."

The activity in Detroit, Freitag said, is a new trend, but it’s no surprise that hotel developers clamor to build in New York."“If brands want to establish themselves, (they) need to have a foothold in New York City," he said.

However, Marriott has an aggressive program throughout the entire U.S., USA Today reported, with a record 360 hotels opening under 19 brands in the U.S. and Canada this year.

Marriott is targeting the increasing numbers of tech-savvy, urban-oriented guests, and their new hotels include a Courtyard a block from the Santa Monica Pier and five AC properties in the Boston area.

Although not opening until 2018, Marriott’s Gaylord brand has an $824 million, 1,500-room hotel and convention center underway just south of Denver International Airport. The hotel will be Colorado's largest when complete and will employ an estimated 10,000 construction workers and provide 2,500 permanent jobs. The project also scored $81.4 million in state sales tax rebates.

Hyatt, USA Today reported, will open at least 11 new hotels under various brands in locations such as Houston, Asheville, NC, and Emeryville, CA, and Hilton is slated to open 270 hotels with 30,000 rooms, most of which are ground-up projects, including the $55.9 million Porter Hotel in downtown Portland, OR.

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