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STR: US hotel pipeline for February 2016

March 16, 2016 Hotel Trends No Comments Email Email

STR’s February 2016 Pipeline Report shows 497,409 rooms in 4,057 projects Under Contract in the United States. The total represents a 14.2% increase in the number of rooms Under Contract compared with February 2015.

Under Contract data includes projects in the In Construction, Final Planning and Planning stages but does not include projects in the Unconfirmed stage.

In the In Construction stage, the U.S. reported 150,406 rooms in 1,171 projects. That number of rooms represents a 16.7% increase in year-over-year comparisons.

“Industry demand growth is slowing and supply growth is picking up. As a result, occupancy gains are shrinking,” said Bobby Bowers, STR’s senior VP for operations.  “The increase in construction activity means more supply will come online at a point fairly late in the current cycle. The focus for hoteliers will be on whether demand can keep pace and how pricing will be affected.”

Among the Chain Scale segments, Upper Midscale (50,826 rooms in 514 hotels) accounted for the most rooms In Construction followed by Upscale (50,139 rooms in 363 hotels).

“The Upscale and Upper Midscale segments offer lower lending risk and lower barriers to entry,” Bowers said. “More markets can accommodate these products and consumers like them. Supply growth in these two segments has led the industry for years and will continue to do so in 2016.”

The Economy segment reported the least contract and construction activity but the largest year-over-year increases in rooms Under Contract (+124.0% to 8,548 rooms) and In Construction (+158.6% to 2,092 rooms).

All segments with the exception of Unaffiliated (-5.7% to 95,091) posted an increase in rooms Under Contract. All segments with the exception of Upper Upscale (-8.7% to 12,818 rooms) reported an increase in rooms In Construction.

U.S. pipeline by Chain Scale segment (number of rooms % change February 2016 versus February 2015):

Chain Scale Existing Supply % Change In Construction % Change Under Contract % Change
Luxury 109,069 +1.8% 7,880 +69.8% 12,366 +42.2%
Upper Upscale 582,344 +1.5% 12,818 -8.7% 43,664 +31.0%
Upscale 671,470 +5.7% 50,139 +3.5% 142,044 +12.9%
Upper Midscale 894,820 +2.1% 50,826 +32.7% 163,727 +21.1%
Midscale 473,114 -0.2% 5,887 +11.7% 31,969 +14.6%
Economy 782,087 -0.1% 2,092 +158.6% 8,548 +124.0%
Unaffiliated 1,534,178 -0.2% 20,764 +19.6% 95,091 -5.7%
Total 5,047,082 +1.2% 150,406 +16.7% 497,409 +14.2%

Source: STR / data current as of 29 February 2016

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