U.S. Hotel Market New Construction Pipeline Down 6% Over Last Year

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According to the November 2011 STR/McGraw Hill Construction Dodge Pipeline Report released this week, the total active U.S. hotel development pipeline comprises 2,861 projects totaling 310,196 rooms.

This represents a 6.3-percent decrease in the number of rooms in the total active pipeline compared to November 2010. The total active pipeline data includes projects in the In Construction, Final Planning and Planning stages, but does not include projects in the Pre-Planning stage.

Among the Chain Scale segments, the Luxury segment reported the largest increase in rooms in the total active pipeline, increasing 48.5 percent with 5,910 rooms. Two other segments reported increases in the number of rooms in the total active pipeline: the Upper Upscale segment (+5.0 percent with 19,926 rooms) and the Upscale segment (+4.1 percent with 78,301 rooms). The Unaffiliated segment ended the month with the largest decrease in rooms in the total active pipeline, falling 13.5 percent to 89,568 rooms.

The Luxury segment reported the largest increase in rooms under construction, rising 113.5 percent to 1,657 rooms, followed by the Upscale segment (+30.8 percent to 16,140 rooms) and the Unaffiliated segment (+17.2 percent to 9,133 rooms). The Midscale segment reported a 56.6-percent decrease in rooms under construction to 2,954 rooms.

"Though the Luxury segment reported the biggest increases in both rooms under construction and rooms in the total active pipeline the segment still reported a small number of actual rooms," said Vail Brown, VP of global sales and marketing at STR. "The Upscale and Upper Midscale Chain Scale segments are the segments to watch because they tend to be popular for new growth as the projects are often easier to finance. Along with the overall construction time is shorter, and during economic downturns, historically, don't suffer as badly as other Chain Scale segments."

U.S. pipeline by Chain Scale segment (number of rooms and percent change November 2011 vs. November 2010):