Decline in U.S. Hotel Construction Amid Economic Uncertainty

• Hotel construction in the U.S. has decreased for the sixth month in a row, with a notable drop in the number of rooms under construction.
• Economic uncertainty and rising construction costs are key factors influencing the slowdown in new hotel developments.

The U.S. hotel industry is experiencing a significant downturn in construction activity, with the number of hotel rooms under construction dropping for the sixth consecutive month, as reported by CoStar’s June 2025 data.

The total number of rooms currently under construction is 138,922, marking an 11.9% decrease from the previous year. This decline is largely attributed to ongoing economic uncertainty and increasing construction costs.

“With hotel demand trending downward, unrelenting economic uncertainty, and rising construction costs, it’s not surprising that the number of hotel rooms under construction is at a 20-quarter low,” said Isaac Collazo, STR’s senior director of analytics. “More than half of all rooms under development are in the Southern region and mostly outside of the Top 25 Markets. Like most of the pipeline, these rooms are mostly in the two planning phases, and many will likely not be built in the near future.”

“Most rooms under construction continue to be centered in the middle tier (Upscale and Upper Upscale),” said Collazo. “While we expect the number of these projects to decrease, they will remain the focus of new development for the foreseeable future.”