A hotel development boom is sweeping the nation, with 865 new hotels scheduled to open in 2016. A total of 103,230 new guest rooms are expected to materialize across the country this year. Hotel research firm STR has compiled a list of the Top 10 cities for development in 2016. Where in the United States do you suppose the most rooms are under construction?
If you guessed New York City, you are correct. According to STR, the Big Apple is slated to gain 13,583 new guest rooms in 2016—the most of any city in the United States. Houston comes in at No. 2, with 6,169 guest rooms under construction, with Dallas close behind with 4,361. Rounding out the Top 10, in descending order, are L.A./Long Beach, Calif., Greater Washington, DC, Las Vegas, Greater Miami, Chicago, Orlando and Boston.
While Detroit did not make the Top 10 list, the comeback city has an impressive 954 guest rooms scheduled to open in 2016, with 4,200 rooms in the pipeline.
Improved Economy Drives Demand
Experts suggest that the spike in hotel development is due primarily to an improving economy and a strong demand. Jan Freitag, senior vice president of lodging insights for STR, reports 21 percent more rooms are under construction compared to a year ago. As Freitag told USA Today, “the industry continues to break records on the demand side and on the revenue side . .. Developers are playing catch up, and we’re seeing a lot of attention on the U.S. lodging industry.’’
Freitag is not surprised that there is so much activity in New York, telling USA Today, “If brands want to establish themselves … (they) need to have a foothold in New York City.’’ The Big Apple is an important market with perennially high demand. According to Freitag, through November, 2015 hotel occupancy in New York was 84.8%, the highest occupancy rate in the country’s top 25 markets. “Developers are saying ‘yes, take an opportunity to go and take some of that demand,’ ’’ Freitag says.
Marriott International Particularly Active
Marriott International is expected to particularly active in 2016. Under its umbrella of 19 brands, it is preparing to open more than 360 hotels in North America this year. That’s “a record number of openings,’’ Eric Jacobs, Marriott International’s chief development officer, North America, Select Service and Extended Stay Brands, told USA Today. New properties will range from a Courtyard in Santa Monica to five AC properties in Greater Boston.
Hyatt is preparing to open new Hyatt Place, Hyatt House and Hyatt Regency hotels in Houston, Chicago, Denver, Emeryville, Calif., and Asheville, North Carolina, and an new Andaz in Scottsdale, Arizona.
Hilton Worldwide, which operates 12 different brands, will unveil more than 30,000 guest rooms in 270 hotels in the U.S. in 2016, most of them new construction. Bill Fortier, Hilton Worldwide’s senior vice president, development, for the Americas, told USA Today, “Existing hotels have become expensive. Money is going towards new development today.’’
Most of the Hilton projects will materialize in Miami and New York, however Fortier points out that other cities not previously on Hilton’s radar will also see development, especially on the West Coast. The company is focusing on limited service hotels that offer breakfast bars rather than full-service restaurants. In addition to being more costly, full-service properties can take up to five years to build, delaying ROI. According to Fortier, with limited service properties “you have a little more certainty when the hotel will open, and when you can start getting the return on your investments.’’