Hotel Construction in the US Industry Market Research Report Now Available from IBISWorld

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As disposable incomes rise and consumers return to spending on hotel stays, demand for construction work on hotels and motels will continue to expand due to rising occupancy rates at existing accommodations. For these reasons, industry research firm IBISWorld has added a report on the Hotel Construction industry to its growing industry report collection.

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Rising travel rates and consumer spending will encourage increased hotel construction

The Hotel Construction industry has faced challenging conditions over the past five years. From 2008 to 2013, industry revenue is expected to fall at an annualized rate of 20.5% to $12.2 billion. During the recession, decreased disposable income limited domestic tourism levels, resulting in lower demand for accommodation services. Furthermore, reduced business travel also decreased demand from business clients. Consequently, occupancy rates fell, and hotels and motels shelved expansion plans and delayed openings, resulting in lower underlying demand for contractors specializing in hotel and motel construction. The biggest decline came from luxury and resort properties, partly because of the construction boom in luxury hotels from 2005 to 2008 and the fact that occupancy rates are more sensitive to changes in disposable income and consumer confidence.

Compounding the industry's challenges was tighter lending criteria, which reduced financing options for hotel expansions and new construction. Consequently, industry revenue decreased at double-digit rates from 2009 to 2011, including a 56.4% drop during 2010, according to data from the US Census Bureau. In 2012, however, the industry entered a period of recovery. In 2013, industry revenue is expected to rise 14.6% due to stronger underlying demand for accommodation services as recovering disposable income and increased tourism, says IBISWorld industry analyst Anna Son. Occupancy rates and room rates have increased steadily since 2009, which has helped underpin rising demand for hotel expansions and new construction.

The Hotel Construction industry exhibits low market share concentration. The largest players are multinational general contractors (GCs) with the economies of scale and staff to take on massive, lucrative contracts for state-of-the-art structures. However, most industry participants are small-scale GCs that serve a narrow, local geographic region. While the industry's largest firms sometimes expand through mergers and acquisitions to gain market share, the prevailing model is to subcontract small and midsize firms when the project calls for it. Furthermore, says Son, industry revenue is increasingly being generated through design-build contracts and consulting and advisory roles, which reduce the necessity of operating larger companies with many employees. Consequently, IBISWorld projects industry concentration to remain low during the next five years.

In the five years to 2018, the industry is expected to achieve strong growth. As disposable incomes rise and consumers return to spending on hotel stays, demand for construction work on hotels and motels will continue to expand due to rising occupancy rates at existing accommodations. In addition, demand for accommodations will be positively impacted by increased international tourism, which will underpin greater demand for construction of new hotels and motels. The industry will also benefit from low interest rates, which will enable financing of these long-term projects. For more information, visit IBISWorld’s Hotel Construction in the US industry report page.

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IBISWorld industry Report Key Topics

This industry includes operators that engage in new work, additions and reconstruction projects for accommodation establishments. This activity includes commercial construction projects for hotels, motels, resorts and related structures.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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