The total number of hotel rooms under construction fell 12.3% compared to September 2024, dropping to 137,956 rooms – more than 80,000 rooms below the peak seen in the third quarter of 2020.
U.S. hotel development pipeline — September 2025
(Percentage change from September 2024)
- In construction: 137,956 rooms (-12.3%)
- Final planning: 258,836 rooms (-3.5%)
- Planning: 327,304 rooms (-2.6%)
According to Isaac Collazo, STR’s Senior Director of Analytics, developers remain cautious amid persistent macroeconomic challenges. “Uncertainty often leads to inaction, and developers and financial institutions are still waiting for a more favorable environment,” said Collazo. “Higher building and material costs are also hampering groundbreakings, and we don’t foresee the cycle turning for some time. However, more rooms are under construction now than after the Great Recession – development is down but still happening.”
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Construction trends by chain scale
Despite the slowdown, hotel construction remains active across all chain segments, though at varying levels of intensity.
| Chain Scale Segment | Share of Existing Supply | Rooms Under Construction | % Change (YoY) |
|---|---|---|---|
| Luxury | 3.8% | 5,911 | — |
| Upper Upscale | 2.1% | 15,292 | — |
| Upscale | 3.6% | 33,376 | — |
| Upper Midscale | 3.3% | 39,075 | — |
| Midscale | 2.4% | 12,746 | — |
| Economy | 0.7% | 4,559 | — |
The upper midscale and upscale categories continue to dominate the active pipeline, representing the majority of ongoing development, while luxury and economy projects make up smaller proportions of current builds.
Broader market implications
The continued decline in hotel construction reflects the combination of higher interest rates, rising construction costs, and lender caution that has slowed new project starts throughout 2025. Developers are focusing more on renovations and conversions rather than new builds, especially in urban and airport markets where demand remains steady but financing remains tight.
While analysts do not expect a near-term rebound, industry observers note that the current slowdown is less severe than post-2008 levels, suggesting a more stable long-term outlook for hotel investment once economic conditions improve.
For travel and hospitality professionals, the trend signals a tighter pipeline for new room supply over the next two to three years – a dynamic that could help stabilize occupancy and average daily rates (ADR) in key U.S. markets.
Tags: U.S. hotel development, CoStar
