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Yahoo
5 hours ago
- Business
- Yahoo
US hotel room construction hits 20-quarter low: CoStar
This story was originally published on Hotel Dive. To receive daily news and insights, subscribe to our free daily Hotel Dive newsletter. Dive Brief: The volume of U.S. hotel rooms under construction decreased year over year for a sixth consecutive month in June, according to new CoStar data. As of last month, there were 138,922 U.S. hotel rooms under construction, a 20-quarter low, according to Isaac Collazo, senior director of analytics at CoStar subsidiary STR. The volume of rooms under construction decreased 11.9% year over year in June, per CoStar. The continued decline is not surprising given 'hotel demand trending downward, unrelenting economic uncertainty and rising construction costs,' Collazo said. Most of the rooms under construction are in the upscale and upper upscale segments, which STR previously forecasted would see the highest RevPAR growth this year, driven by changing traveler behavior. Dive Insight: The volume of U.S. hotel rooms under construction has decreased each month since January, coinciding with President Donald Trump's second term. In those months, U.S. government actions have caused economic uncertainty, and tariffs have negatively impacted construction pipelines. The volume of U.S. hotel rooms in final planning (266,276 rooms) also decreased year over year in June, albeit only by 0.1%, according to CoStar. The number of U.S. hotel rooms in the planning stage (349,802 rooms), meanwhile, increased 4.8% year over year in the month. The majority of rooms in the U.S. hotel construction pipeline are in these two planning phases, but 'many will likely not be built in the near future,' Collazo said. Of rooms currently under construction, the majority are in the upscale and upper upscale segments, according to Collazo, who also noted that more than half of all rooms under development are in the South, largely outside of the top 25 markets. Higher-tier hotel segments were a bright spot for the industry last year, driving performance as high-income households prioritized travel. That trend has continued, with high-income households anticipated to make up nearly half of travelers this summer, Deloitte reported in May. Ahead of this year's Memorial Day weekend, travel outlooks appeared mostly stable despite a dip in consumer confidence and dampening international visitation. Last month, however, CoStar and Tourism Economics downgraded their 2025 and 2026 growth projections for U.S. hotel top-line performance metrics, citing elevated macroeconomic concerns. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
US hotel construction hits five-year low
The number of hotel rooms under construction in the United States fell for the sixth straight month in June 2025, reaching its lowest point in five years, according to CoStar's latest data. The total stood at 138,922 rooms, an 11.9% decrease compared to June 2024. This marks a significant slowdown in hotel development, reflecting broader economic challenges and shifting market dynamics. Economic uncertainty and rising costs dampen development Analysts attribute the decline to several factors, including reduced demand for hotel stays, persistent economic uncertainty, and escalating construction costs. Isaac Collazo, senior director of analytics at STR, noted that the current environment has led to a 20-quarter low in the number of rooms under construction. He added that more than half of the rooms in development are located in the Southern United States, primarily outside the top 25 metropolitan markets, with many projects still in the early planning stages and unlikely to commence construction soon. Regional trends and market focus The Southern region accounts for over half of all rooms currently under development, with a significant portion situated outside major metropolitan areas. Despite the overall slowdown, the upscale and upper upscale segments continue to dominate new developments, comprising the majority of rooms under construction. These segments remain the focal point for developers, even as the number of new projects is expected to decrease in the near future. Future outlook for hotel development Looking ahead, the hotel construction pipeline remains active, with 349,802 rooms in the planning phase, a 4.8% increase from the previous year. However, the majority of these projects are still in the early stages, and many may face delays or cancellations due to ongoing economic pressures. The industry will need to navigate these challenges carefully to maintain a balanced and sustainable development trajectory. The sustained decline in hotel construction underscores the need for developers and investors to adapt to the current economic landscape. While the planning phase shows some growth, the actualisation of these projects will depend on the resolution of economic uncertainties and the stabilization of construction costs. "US hotel construction hits five-year low" was originally created and published by Hotel Management Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
