HENDERSONVILLE, Tennessee—With the numerous rooms as it has had in various stages of development in the past two years, New York remains at the top of the list of United States markets with the highest projected growth rate from new hotel development, according to the October 2010 STR/TWR/Dodge Construction Pipeline Report. Other markets, such as Las Vegas, are still working on creating new demand generators to absorb the new rooms opened in the past 12 months.
When reviewing the October U.S. pipeline activity, the following top 26 U.S. markets reported strong anticipated room growth in the active pipeline phases (in construction, final planning and planning). Although New York topped the charts as of October 2010 and October 2009, the amount of markets expecting 8% or more growth in new rooms development dropped from 15 to 11. Philadelphia edged out Houston in 2010 as the market with the second highest expected percent growth. Major markets like Oahu Island, Denver, Seattle and Las Vegas dropped their expected growth rates to less than 8% in 2010.
For projects under construction, the number of markets with at least 2% rooms growth rate dropped from 13 markets to six markets from October 2009 to October 2010. New York City is expecting the largest percent increase to rooms supply, with an anticipated 7.2% growth, compared to October 2009 when it was expecting a 12.2% increase from projects under construction. In October 2009, Las Vegas was anticipating a 4.2% supply increase from hotels under construction; in December the 4,004-room Aria Resort & Casino and 1,495-room Vdara Hotel & Spa opened.
Although total U.S. rooms under construction dropped from 111,927 rooms in October 2009 to 56,132 rooms in October 2010 (50% decline), development projects continue to get approvals and financing, albeit at a slower rate than in previous years. With this slowing of new rooms coming into the market, existing markets are having a better time absorbing these new rooms as demand continues to grow in many markets in the U.S.