Research - APRIL 12, 2017

STR: U.S. hotel pipeline for March 2017

by Andrea Waitrovich

The United States reported 571,311 rooms in 4,721 hotel projects under contract in March 2017, according to STR’s pipeline report. The rooms total is a 14.4 percent increase over the same month in 2016.

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 190,764 rooms in 1,449 projects. Based on the number of rooms, that is a 24.4 percent increase in year-over-year comparisons.

Among the Top 26 Markets, New York City reported the most rooms Under Contract (28,166 rooms) and most rooms In Construction (15,911 rooms).


Top 10 U.S. Markets (sorted by In Construction phase)


Market Existing Supply In Construction March 2017 In Construction March 2016 In Construction YOY % change
New York 115,295 15,911 15,145 +5.1%
Dallas 82,710 7,184 4,428 +62.2%
Los Angeles/Long Beach 99,195 5,924 4,931 +20.1%
Seattle 43,485 5,155 2,647 +94.7%
Houston 85,702 4,964 5,296 -6.3%
Nashville, Tenn. 39,959 4,868 1,814 +168.4%
Denver 45,427 4,672 2,876 +62.4%
Las Vegas 164,814 4,207 3,905 +7.7%
Washington, D.C.-MD-VA 110,452 4,085 3,146 +29.8%
Chicago 114,183 3,840 3,186 +20.5%



Hotel transactions activity in the Americas, after a relatively strong year underpinned by offshore buyers, is slated to remain flat at up to $31 billion in 2017, according to JLL. In 2016, North America overtook Europe as the largest destination for inbound capital, attracting nearly $14 billion from overseas investors.

The North America hotel sector has had a great run over the past several years, but new supply, competition from accommodation-sharing sites (short-term rentals), and a flattening of growth in corporate travel have muted investor enthusiasm for the asset class. But the sector ranked fourth of the six major sectors, according to PricewaterhouseCoopers’ Emerging Trends in Real Estate – Hospitality and Leisure survey. Within the sector, midscale hotels ranked best, followed by upscale, while economy and luxury hotels lagged. Enthusiasm for development of new hotels has fallen even further.

Concern over supply growth ranked the most important threat to 2017 lodging fundamentals, with 87 percent indicating moderate or great importance of this factor. This sentiment aligns with PwC’s view that supply growth will outpace demand growth in 2016 for the first time since 2009. This trend is also anticipated to continue and become more pronounced in 2017.

The lodging sector has been an active participant in the recent mergers and acquisitions boom, with a number of high-profile mergers and acquisitions. Notable mergers include Marriott’s merger with Starwood, which closed in September 2016 and Commune Hotels & Resorts’ merger with Destination Hotels & Resorts in early 2016.

The reasons for consolidation are many. For large operators with brand recognition, consolidation enables expansion of loyalty programs and marketing budgets, which is appealing to owners.

Consolidation is anticipated to have both positive and negative consequences for owners going forward, stated PwC. Approximately 55 percent of survey respondents indicate that consolidation is likely to reduce owners’ negotiating leverage over the next two years, compared to 42 percent indicating consolidation has already diminished negotiating leverage over the past two years. However, consolidation may also have positive implications.

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