U.S. Hotel Industry Ended Record-Setting Development Streak in May
Hotel construction output lags metrics like occupancy in response to economic conditions. But the slow reaction time also means the development pipeline will likely take far longer to rebound from coronavirus than hotel performance.
It took several months, but coronavirus is finally impacting hotel construction.
The hotel development pipeline had been an anomaly to the economic downward spiral from the pandemic. While hotel occupancy rates and revenue plummeted in March and April, the pace of hotel construction continued to hit record highs in both months. But construction finally showed signs of a slowdown in May, with nearly 3,000 fewer hotel rooms under construction compared to the record level seen in April.
"It's purely a function of the rooms under construction that completed aren't being replenished at the same pace of projects going from final planning to construction," said STR Senior Vice President of Lodging Insights Jan Freitag. "We fully expect the number of rooms under construction to decline for the foreseeable future, the next two years at least."
