The Phoenix metro area, which already boasts a robust hotel pipeline, is expected to experience continued growth in this sector through 2026, hospitality development executives said at Bisnow’s Phoenix Hotels, Resorts and Wellness Summit.

“This year alone, the hotel industry is going to generate $1.1B in tax revenue” for the metro area, Haleigh Hildebrand, American Hotel and Lodging Association vice president of public affairs, said at the event held at the Hilton Scottsdale Resort & Villas in Scottsdale on April 9.

Phoenix is projected to open 3,650 hotel rooms across 22 properties this year, second only to New York and up 117% from 2025, according to CoStar. The city had 124 projects totaling 16,300 rooms under development in the fourth quarter, according to Lodging Econometrics data reported by Business Travel News.

Caliber CEO Chris Loeffler said this boom in construction comes after a six-year drought when few hotels were built anywhere. The market is catching up to what is needed, and that is causing developers to favor building from the ground up in new locales, Loeffler said.

“There are pockets where there’s more and more demand and no new supply,” he said. “And that’s where we’re building, in those pockets where nothing’s been built in a long time. It makes sense to build an asset rather than buy something and renovate it.”

The cranes are everywhere in the Phoenix area, said Adrienne Andrews, JLL managing director of debt. Developers are racing to build around the growing Taiwan Semiconductor Manufacturing Co. project, she said.

“Phoenix is a really unique spot relative to supply and demand,” she said. “We’ve got a really productive situation. But the question is, can we maintain it?”

The increase in new hotels across the region comes despite skyrocketing construction costs. Project costs in 2026 are predicted to rise between 2.8% and 3.4% due to tariffs on materials alone, according to Cushman & Wakefield.

A decade’s worth of rising hotel construction costs has caused developers to get creative, combining hotels with residential or retail components, said Marcos Casillas, managing director at 1754 Properties LLC.

Hotel partnerships with entities like sports stadiums and parks are another nontraditional route developers are taking to garner success, said Andrea Schaub, a principal at Cooper Carry. The Atlanta-based development firm is designing a hotel just past left field in a minor league baseball park in the Southeast.

“We’re seeing the teaming of hotels with places like ballparks and surf parks more and more frequently,” Schaub said. “It opens up the doors with how you leverage the park and how you create packages for the hotel guests.”

There are already quite a few hotels planned and underway in Phoenix. Last month, developers broke ground on Halo Vista, a 2,300-acre mixed-use development next to the TSMC campus. Just last week, Phoenix officials approved a 260-room hotel near the Mayo Clinic.