Upscale, Upper-Midscale Hotel Projects Dominate U.S. Pipeline
Upper and upper-midscale brands accounted for about 84,000 rooms under construction in April, according to the April 2015 STR Pipeline Report, which is about two-thirds of total U.S. hotel construction activity. A similar dominance is indicated by the latest Lodging Econometrics Total Construction Pipeline, which noted that more than three-quarters of the 3,846 projects in its pipeline are represented by the two chain scales. Such projects might hit the market faster than the higher-end brands, added Lodging Econometrics, as many of them are prototypical designs that begin construction within 12 months. Many of these are hotels with less than 200 rooms.
The 3,671 projects that comprise STR's April report total 441,559 rooms, a 15.2 percent year-over-year increase in room count. All of the segments except for economy report an increase in rooms under construction, with upper upscale leading the year-over-year increases with a 62.9 percent jump.
"Barring any exogenous event," said the Lodging Econometrics report, "everything suggests that there are a few more years of sustained profitability ahead before the flow of new hotel openings could possibly become problematic." The 4.2 percent growth rate of demand in the first quarter was four times greater than new supply growth, according to Lodging Econometrics.