After several years of sharp decline during the recession, lodging construction continued its solid comeback, growing 18% in 2013. This market is also expected to grow an additional 10% in 2014.
According to Smith Travel Research, Hendersonville, Tenn., the number of rooms under construction in 2013 was up 11.6% over the previous year in May. Lodging Econometrics, Portsmouth, N.H., forecasts the opening of 591 hotels with 66,102 rooms in 2014.
(Click here to see Lodging Construction Chart)
Contributing to growth predictions are revenues per available room (RevPar) statistics, one of the key measurements in assessing the strength of the hospitality market. According to a report by PriceWaterhouseCoopers (PwC), “Hospitality Directions U.S.,” November 2013, RevPar growth should end up at 5.5% for 2013 with expected growth of 5.9% this year.
Construction growth is expected to be strongest in upscale neighborhoods of large metropolitan areas like New York City. Smith Travel Research reports that 70% of the hotels under construction are upper midscale or upscale.
In addition, improvement of existing properties will continue to be a focus for the industry until such time as room occupancy nears capacity, and room rates show continued signs of growth. As for green building activities, this is more commonplace in remodel and retrofit type projects.
The increase in average daily rates per room will remain modest as business and vacation travelers shop for the best buy.
