U.S. Hotel Supply Outlook: How Slowing Growth Is Shaping the 2025 Market

Report Overview

Many research reports on the hotel industry focus on demand trends, analyzing occupancy rates, average daily rates, and revenue per available room. However, few studies examine the supply side of the supply-demand equation. This report aims to bridge that gap by providing a detailed analysis of the current state of hotel room supply in the United States.

The onset of the COVID-19 pandemic in 2020 saw hotel demand in the U.S. fall nearly 70% and rise more than 100% within the span of a year. Supply growth, on the other hand, fluctuated much less, with one metric in particular – rooms under construction – yet to recover to pre-COVID-19 levels, constrained by rising construction and labor costs. These constraints have slowed hotel openings, causing U.S. hotel supply growth to drop from a pre-pandemic average of 1.3% year-over-year to just 0.5% today.

The slowdown in supply growth has significantly affected market dynamics, widening the gap between the cost of building new hotels and acquiring existing ones. This disparity has fueled an increase in M&A activity and driven hotel brands to expand through strategic acquisitions and partnerships. Notably, major hotel brands are increasingly acquiring or collaborating with boutique, luxury, and midscale brands to capitalize on new opportunities.

While 2025 could see a rebound in the construction of new hotel projects as interest rates fall and construction cost growth slows, challenges such as uncertain tariff policies may continue to put pressure on costs. 

What You'll Learn From This Report

• Growth levels of hotel room supply in the U.S. today

• The number of hotels in the pipeline for new openings

• How rising construction costs in the U.S. have reduced the number of hotel rooms under construction

• The effects of a constrained supply environment on the wider hotel market: higher pricing growth, brands gaining share over independent hotels, and increased M&A activity due to high construction costs and relatively lower acquisition prices.

• Opportunities for future growth across the chain scale, including market share analysis of major hotel brand per chain scale