The USA hotel market is continuing to boom, with STR’s July 2016 Pipeline Report showing 529,665 rooms in 4,322 projects Under Contract across the nation.
The total represents a 22.9% increase in the number of rooms Under Contract compared with July 2015.
Under Contract data includes projects in the In Construction, Final Planning and Planning stages but does not include projects in the Unconfirmed stage.
In the In Construction stage, the U.S. reported 171,276 rooms in 1,305 projects, a 32.6% increase in year-over-year comparisons. A large percentage of construction activity, 47.7%, continues in the Top 26 Markets by existing supply.
Among those markets, New York, New York, reported the most rooms Under Contract (30,700 rooms) and most rooms In Construction (15,770 rooms).
“New York continues to lead in development with roughly 9% of all U.S. hotel construction activity,” said Bobby Bowers, STR’s senior VP for operations.
“The more than 15,000 rooms in the In Construction phase represent 14% of New York’s existing supply, and that is likely to continue with more than 6,500 rooms in Final Planning. This type of development creates a strong headwind for near-term market performance.”
Two additional markets each reported more than 15,000 rooms Under Contract for the month: Houston, Texas (18,232 rooms), and Dallas, Texas (16,219 rooms).
Three markets in addition to New York each reported more than 5,000 rooms In Construction: Los Angeles/Long Beach, California (5,633 rooms), Dallas (5,562 rooms) and Houston (5,381 rooms).
“Continued supply increases combined with continued weakness in the oil industry likely means continued challenges for existing hotel operators in Houston,” Bowers said.
Three markets each reported fewer than 1,000 rooms In Construction: St. Louis, Missouri-Illinois (943 rooms); Oahu Island, Hawaii (892 rooms); and Norfolk/Virginia Beach, Virginia (456 rooms).
Bowers also noted that San Francisco/San Mateo, California, reported the fifth-lowest In Construction total (1,376 rooms). However, that total represents 2.7% of the market’s existing supply.
“San Francisco has been a top performer amongst the top markets, but hoteliers may feel the effects of new supply in the coming months,” Bowers said.