It’s all good if you’re in the hotel business.
Occupancy rates in the U.S. are expected to remain at record levels through 2017, according to PKF Hospitality Research|CBRE Hotels, which also projects room rates to increase by 5.5% and 5.8%, respectively, this year and next.
With demand exceeding supply, developers are expected to deliver 103,230 hotel rooms in 865 projects in 2016, according to the latest Comprehensive Pipeline Summary from the market research firm STR.
Through November 2015, the existing supply of hotel rooms nationwide stood at 5,031,859. A total of 457,606 rooms were under construction or in various planning stages.
For all the talk about the rise in demand and construction of luxury hotels, STR foresees the greatest number of hotel rooms—53,725 rooms—being delivered in the “upper midscale” classification, followed by 43,150 “upscale” room deliveries. Conversely, STR estimates that only 15 luxury hotels with 3,468 rooms are expected to open this year.
New York, with an existing supply of 117,367 rooms, leads the nation with 80 hotels and 13,583 rooms under construction, followed by Houston (with 79,255 existing rooms and 6,269 under construction), Dallas (79,572; 4,361), Los Angeles/Long Beach (98,186; 4,240), and Washington, D.C. (107,776; 3,949).
Jan Freitag, STR’s Senior Vice President of Lodging Insights, told USA Today that while room construction was up 21% over a year ago, the 1.5% increase in rooms opening in 2016 would still be below the longer-term annual average of 1.9%
Along from rising customer demand, hotel construction is being driven by room rate appreciation. For example, in Greater Sacramento, Calif., where hotel occupancy rates exceed 77% and where at least 19 hotels are under construction, the average room rates set a record in October at $116.67 per night, up 10.6% from a year earlier, according to PKF Consulting.
However, there’s always the concern that booms will eventually overheat some markets. In Central Dallas, where at least 14 hotels are slated to open between fall 2015 and the end of 2018, investors were bullish about their projects but wondered just how many rooms the market could absorb.
“I can’t remember when we’ve ever had that influx of hotel rooms, certainly in recent history,” said John Crawford, who heads Downtown Dallas Inc., which advocates for downtown development. “And I’ve been in this market for the last 35 years.”
Related Stories
| Jul 15, 2014
Michael Graves talks with Washington Post about new design eye from life in a wheelchair
Celebrated American architect Michael Graves sits with the Washington Post to talk about how being on a wheelchair changed the way he focuses on design.
| Jul 14, 2014
Meet the bamboo-tent hotel that can grow
Beijing-based design cooperative Penda designed a bamboo hotel that can easily expand vertically or horizontally.
| Jul 10, 2014
BioSkin 'vertical sprinkler' named top technical innovation in high-rise design
BioSkin, a system of water-filled ceramic pipes that cools the exterior surface of buildings and their surrounding micro-climates, has won the 2014 Tall Building Innovation Award from the Council on Tall Buildings and Urban Habitat.
| Jul 7, 2014
7 emerging design trends in brick buildings
From wild architectural shapes to unique color blends and pattern arrangements, these projects demonstrate the design possibilities of brick.
| Jul 7, 2014
A climate-controlled city is Dubai's newest colossal project
To add to Dubai's already impressive portfolio of world's tallest tower and world's largest natural flower garden, Dubai Holding has plans to build the world's largest climate-controlled city.
| Jul 1, 2014
Sochi's 'kinetic façade' may steal the show at the Winter Olympics
The temporary pavilion for Russian telecom operator MegaFon will be wrapped with a massive digital "pin screen" that will morph into the shape of any face.
| Jun 30, 2014
Research finds continued growth of design-build throughout United States
New research findings indicate that for the first time more than half of projects above $10 million are being completed through design-build project delivery.
| Jun 25, 2014
Frank Lloyd Wright’s Spring House, Cincinnati’s Union Terminal among 11 Most Endangered Historic Places for 2014
The National Trust for Historic Preservation released its annual list of 11 Most Endangered Historical Sites in the United States for 2014.
| Jun 20, 2014
Sterling Bay pulled on board for Chicago Old Main Post Office project
Sterling Bay Cos. and Bill Davies' International Property Developers North America partner up for a $500 million restoration of Chicago's Old Main Post Office
| Jun 19, 2014
First look: JDS Architects' roller-coaster-like design for Istanbul waterfront development
The development's wavy and groovy design promises unobstructed views of the Marmara Sea for every unit.
