Hundreds of new hotels are rising across the USA as the lodging industry seeks to cash in on rising room rates, and strong demand from travellers
According to a report from industry tracker Smith Travel Research, the number of hotel rooms under construction in the US recently jumped 20% from a year earlier. More than 196,000 rooms and more than 2,000 hotels will open within two years across the country, that's the highest number of new rooms in the pipeline in more than seven years, the report states.
For travelers, the boom will provide more lodging selections in many markets. In some places, including San Antonio and Phoenix, the buildup of hotel rooms could possibly push down rates, says Jan Freitag, Smith Travel Research Vice President . But in the two markets with the most rooms under construction, Las Vegas and New York, traveler demand is so strong that room rates should continue increasing, Freitag says.
Good times Times have been good for the US hotel industry. It finished 2006 with a occupancy rate of 63.4%, the highest since 1998, says industry consultant Bjorn Hanson at PricewaterhouseCoopers. This quarter, the average nightly rate is expected to reach a record $103, vs. $83 five years ago, according to PKF Consulting. The surge in construction should continue through at least next year, though probably not at the current fast pace, Hanson says.
Hotel construction came nearly to a halt after recession and terrorism in 2001. Although travel started to rebound strongly by 2004, the hotel industry was slow to add properties, concentrating instead on expansions and upgrades. But now, that's changed.
For now, developers mostly are opting to build hotels that will charge midrange rates, the Smith report shows. Holiday Inn Express is building the most rooms, followed by the Hampton Inn chain and Hilton Garden Inn.
Holiday Inn Express, the midprice, limited-service chain, is taking advantage of New York's high rates. The chain opened its first New York hotel in October 2005 and already plans to grow to seven, says John Merkin, the chain's top U.S. executive.
All the activity, however, has convention bureau officials worrying about a potential hotel glut, bureau spokesman Bob Schultz says.
San Antonio will add the equivalent of nearly 13% of existing hotel rooms in the next two years, the Smith report says.
Optimism reigns Industry executives, for now, remain optimistic about filling future rooms. The Grand Hyatt's sales and marketing director, Scott Lane, says his hotel's already booked more than 500,000 room nights, with an additional 350,000 pending. Those figures rank it as the best opening in Hyatt's history, he says. The hotel opens in February.
Much of the demand is coming from large groups that previously were too big to meet in San Antonio. "There's a lot of demand for this city," Lane says.
About Smith Travel Research:
Smith Travel Research (STR) is the lodging industry's leading information and data provider. STR has the most comprehensive database of hotel performance information ever compiled.
www.smithtravelresearch.com 
