There is good news for the construction industry in a recent report by economist Anirban Basu. The performance of hotels in the United States has improved over the last 12 months. As a result, more hotels are being built or renovated. More specifically, Philadelphia is among the improved cities with regard to occupancy rates with a 21% increase.
Basu cites Census Bureau numbers to show that “construction put in place” in the hotel sector expanded by 11.6% between January 2012 and January 2013. If the same measure is made from February to February the increase jumps to 16%. He relies on STR, a tracking mechanism for hotel supply and demand, to conclude 2,728 hotel projects are active in the United States as of February 2013. This measure, which shows construction as opposed to hotel occupancy, is an increase of roughly 10% from the same time a year before. Most of these increases seem to be in luxury hotels.
It is hard to say whether this growth is permanent or artificial since travel lodging can be cyclical and other factors like financing are still difficult to predict. Regardless of the sustainability of this growth, it present some reason for short term optimism.