U.S. hotel rooms under construction increased nearly 15% in April compared to a year ago.
There are 4,843 hotels in the pipeline, totaling 580,427 rooms under contract (this includes projects under construction, in the planning stages and projects that are still unconfirmed), STR reports. Though pipeline activity is up annually, STR senior vice president of operations Bobby Bowers said room construction has been on the decline for two consecutive months.
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“Year-over-year growth also is lower than this time last year," Bower said in a statement. "While we won’t know for sure for another several months, perhaps we are seeing the beginning of a slowing development activity period."
Upper midscale hotels accounted for the most construction in April, with 625 hotels and 64,269 rooms under development. This segment was followed by upscale hotels, which had 446 locations and 59,979 rooms under construction.
Activity in the hotel sector has been robust. This year, the sector posted its strongest Q1 performance on record and had pricing gains of 1.3% month-to-month after an 11-month streak of negative valuation growth.
Bowers attributed last quarter’s strong performance in part to robust growth experienced in occupancy, average daily rates, RevPAR. A favorable beginning of the year included events that drove hotel demand, such as Easter, the presidential inauguration and the 2017 Women’s March.
“Limited service still accounts for roughly two-thirds of all hotel construction in the country,” Bowers said. “But the influx of new supply didn’t seem to upset upscale and upper midscale performance during the first quarter. Helped by the Easter calendar shift, room demand growth was the highest in those two segments.”
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