U.S. Hotel Construction Pipeline Dips 34.6 Percent in December

Vacation News » Vacation & Leisure Real Estate Edition | By Michael Gerrity | January 14, 2010 1:42 PM ET

(HENDERSONVILLE, TN) -- The STR-TWR-Dodge Construction Pipeline Report released this week showed a total of 3,829 active projects comprising 401,090 rooms in the U.S. hotel development pipeline for December 2009.

This represents a 34.6-percent decrease in the number of rooms in the total active pipeline compared to December 2008. The total active pipeline data includes projects in the In Construction, Final Planning and Planning stages, but does not include projects in the Pre-Planning stage.

Among the Top 10 Markets by rooms in the In Construction phase, New York, New York, topped the list with 11,618 rooms, which accounted for 12.6 percent of the market's existing supply.

"New York, New York, captures the top spot from Las Vegas, Nevada, for year-end rooms in construction," said Duane Vinson, vice president at STR. "Despite a 1.9-percent year-to-date decline in room demand and a 28.1-percent fall in revenue per available room, New York continues its building boom. Comprising more than 11,600 rooms in the In Construction phase, these 79 projects amount to 12.6 percent of the market's existing room supply. It will be interesting to see how well the city absorbs all of the new rooms coming online in 2010 given that room rates already are heavily discounted."

Houston, Texas, followed New York, with 3,854 rooms in the In Construction phase, accounting for 5.6 percent of the existing supply. Dallas, Texas (2,591 rooms and 3.4 percent of the existing supply), Washington, D.C. (2,522 rooms and 2.5 percent of existing supply), and Atlanta, Georgia (2,369 rooms and 2.5 percent of existing supply) rounded out the top five markets by rooms in the In Construction phase of development.

"Perhaps making the year-end Top 10 list for rooms in the In Construction phase isn't the best during the worst economy since the Great Depression, but there are few changes in this year's group of Mega Markets," Vinson continued. "Phoenix, Arizona, is out; Seattle, Washington, is in. Seattle comes in ninth as we wrap up the year with 1,232 rooms under construction. Incidentally, Seattle is the only market in the Top 10 that doesn't also lead in existing supply (coming in 21st with less than 40,000 rooms)."

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