Although travel and hospitality have recovered significantly since the pandemic, new hotel development in Charlotte has been sparse amid elevated costs and financing challenges, the Charlotte Ledger reported.

Developers looking to build new hotel projects in the Queen City face financial hurdles that reflect broader national trends, like high borrowing, construction, labor and material costs. These factors are compounded by increasingly expensive land prices in prime metro locations.

Hotel development costs in the U.S. depend on the type and scope. But most select-service build-outs in the country cost $215K to $325K per key, according to a cost guide by Terrapin Construction Group. Upscale, full-service hotels can cost more than $600K per key. 

But revenue per available room is sliding across Charlotte, with every submarket down, according to a report by Newport Hospitality Group. Nationally, last week, the industry reported a 10.4% year-over-year RevPAR increase, according to CoStar News.

Build-out is indeed also struggling on a national level, due to costs for labor, insurance, utilities and maintenance, as well as limited pricing power, according to a first-quarter Matthews report. These costs continue to “constrain hotel development nationwide,” with lenders requiring larger equity contributions and underwriting projects more conservatively, according to the HVS U.S. Hotel Development Cost Survey 2026.

Despite Charlotte’s difficulties in this space, demand for hotel stays in the Carolinas remains healthy, thanks to “population in-migration, diversified employment growth and a balanced mix of urban business, university and coastal tourism markets,” according to a report on hospitality in the Southeast. The sector also saw growth across the Carolinas this summer.

A way into the market in Charlotte might be via conversion projects, the Ledger reported, which are “less costly than building from the ground up.”

Converting existing hotel properties into higher-end ones is a trend across several sectors and cities. The Wall Street Journal reported this summer that “investors are snapping up shabby hotels and whipping them into shape.” Hotel sales in the U.S. rose 28% in the first half of the year, as owners increasingly began selling to buyers looking to convert the properties.

In Charlotte last week, New York-based Spandrel Development Partners unveiled plans to bring a 200-room W Hotels to a conversion project at 400 South Tryon. The facade will be “reskinned,” and the tower will be gutted down to its frame to be overhauled, making way for hotel rooms on floors 1-9 and nearly 400 apartment units on the upper floors. 

Spandrel was able to plan for a hotel thanks to the conversion project's “low-cost basis,” the Ledger noted. 

“In a rising interest-rate environment, it is difficult to make new development profitable and underwrite well,” Spandrel co-founder Emanuel Neuman told the Ledger.

Plus, the location is ideal: 400 South Tryon should see hotel traffic thanks to its location near concerts and sporting events at Bank of America Stadium. Another project that should have success thanks to its location — part of the redevelopment of the South End — is White Lodging's planned hotel on a 0.63-acre site. 

In January, Charlotte Center City Partners said it aims to continue transforming Uptown Charlotte from a business hub into an entertainment district, with $4.4B in public and private investment. Much of the investment encompassed converting older office buildings into new spaces, like hotels, the Charlotte Observer reported.

Marcus & Millichap had forecast an uptick in Charlotte’s hospitality sector this year, but new hotel construction in the city remains expensive and largely inaccessible.