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
| May 25, 2011
Hotel offers water beds on a grand scale
A semi-submerged resort hotel is the newest project from Giancarlo Zema, a Rome-based architect known for his organic maritime designs. The hotel spans one kilometer and has both land and sea portions.
| May 20, 2011
Hotels taking bath out of the bathroom
Bathtubs are disappearing from many hotels across the country as chains use the freed-up space to install ever more luxurious showers, according to a recent USAToday report. Of course, we reported on this move--and 6 other hospitality trends--back in 2006 in our special report "The Inn Things: Seven Radical New Trends in Hotel Design."
| May 18, 2011
Design diversity celebrated at Orange County club
The Orange County, Calif., firm NKDDI designed the 22,000-sf Luna Lounge & Nightclub in Pomona, Calif., to be a high-end multipurpose event space that can transition from restaurant to lounge to nightclub to music venue.
| May 10, 2011
Dinner is now served…atop the Lincoln Memorial?
Take a look at the temporary restaurant sitting atop Brussels’ historic Arc de Triomphe-Triomfboog. The Cube, by Electrolux, offers 18 diners a spectacular view of the Parc du Cinquantenair, and is one of two structures traveling across Europe, making stops at famous landmarks in Belgium, Italy, Switzerland, Sweden, and Russia. What do you think about one of these 60-tonne structures being placed on a U.S. memorial?
| Apr 13, 2011
Southern Illinois park pavilion earns LEED Platinum
Erin’s Pavilion, a welcome and visitors center at the 80-acre Edwin Watts Southwind Park in Springfield, Ill., earned LEED Platinum. The new 16,000-sf facility, a joint project between local firm Walton and Associates Architects and the sustainability consulting firm Vertegy, based in St. Louis, serves as a community center and special needs education center, and is named for Erin Elzea, who struggled with disabilities during her life.
| Mar 17, 2011
Hospitality industry turns to HTS Texas for ‘do not disturb’ air conditioned comfort
Large resort hotels and hospitality properties throughout the Southwest have been working with local contractors, engineers and HTS Texas for the latest innovations in quiet heating, ventilating and air conditioning (HVAC) equipment. The company has completed 12+ projects throughout Texas and the Southwestern U.S. over the past 18 to 24 months, and is currently working on six more hotel projects throughout the region.
| Mar 11, 2011
Holiday Inn reworked for Downtown Disney Resort
The Orlando, Fla., office of VOA Associates completed a comprehensive interior and exterior renovation of the 14-story Holiday Inn in the Downtown Disney Resort in Lake Buena Vista, Fla. The $25 million project involved rehabbing the hotel’s 332 guest rooms, atrium, swimming pool, restaurant, fitness center, and administrative spaces.
