Latest US, Canadian hotel pipeline shows no evidence of overbuild

The US hotel development pipeline comprises 2,915 projects totaling 315,200 rooms. That represents a 10.5-percent decrease in the number of rooms in the total active pipeline compared to September 2010.

“US hotel rooms in the development pipeline continue trending at very low levels,” said Bobby Bowers, senior VP of operations at STR. He added:

“Rooms under construction declined about 8 percent in September from prior-year levels, though the sequential number inched up slightly from August. September upper-end segment construction increased from prior year, while the midscale and economy segments declined.

Bottom line: “New supply will not be an issue in the near to intermediate term for hotel operators in most U.S. markets.”

Among the chain scale segments, the luxury segment ended the month with the largest increase in rooms in the total active pipeline, rising 15.6 percent with 5,371 rooms, followed by the upper upscale segment with an 8.9-percent increase with 23,335 rooms.

Two segments reported decreases in rooms in the total active pipeline of more than 20 percent: the midscale segment (-24.8 percent with 24,737 rooms) and the economy segment (-22.3 percent with 3,619 rooms).

Canadian hotel development continues at a rate of just over one percent in 2011, says STR. “That’s in line with the industry’s trailing five-year annual average,” said Bowers, senior VP of operations at STR. He added:

 “Rooms under construction are down slightly from the same time last year, and final planning rooms are up, driven by upper midscale projects. Similar to the US trend, upscale and upper midscale rooms dominate the number of rooms under construction in Canada.”

Among the chain scale segments, the upper midscale segment reported the largest increase in rooms in the total active pipeline with a 31.7-percent increase and 5,589 rooms, followed by the Luxury segment with a 19.7 percent increase and 711 rooms.

The midscale segment experienced the largest decrease in rooms in the total active pipeline.

The Pipeline Report is co-produced by McGraw Hill Construction Dodge, and the dedicated pipeline team at STR.
 

STR provides clients  —  including hotel operators, developers, financiers, analysts and suppliers to the hotel industry  —  have access to hotel research with regular and custom reports covering North America, Mexico and Caribbean.

By David Wilkening