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Demand For Hotels Has Sunk Along With Oil Prices—But Supply Keeps Growing

Demand For Hotels Has Sunk Along With Oil Prices—But Supply Keeps Growing

Low oil prices have sunk demand for hotels in oil- and gas-centric regions of the country—but that hasn’t put a dent in supply growth, according to a study by STR's consulting and analytics division.

Through Q1, the 20 submarkets that account for the majority of hotels in oil-dependent regions saw an 8.8% drop in demand hand-in-hand with a 3.7% rise in supply, World Property Journal reports.

"Over the past five years, oil and gas regions have accounted for 20% of the new hotel rooms developed in the US," says STR's VP of consulting and analytics Steve Hennis. "However, now there is a glut in the world's oil supply, and that is having a noticeable impact in the US, where oil is more costly to produce.”

Hotels in these regions may see some light soon, as oil climbed back over $45/barrel in April—although some analysts say oil’s recent rally is bound to reverse itself. [WPJ]