VIEWPOINT: Don't Write Off Hospitality: The Hotel Market Is Sending Contractors a Clear Signal

The following Viewpoint is written by Craig Plescia, chief executive of Plescia Construction & Development

Every few years, someone in this industry declares that the hotel construction market is finally cooling off. And every few years, the bid invitations keep coming.

I've been a commercial general contractor for the better part of two decades, working hospitality projects across the Northeast, Southeast, and Sun Belt. Over the past five years, a stretch that included a global pandemic, two years of historic inflation, and a sustained high interest rate environment, I've kept a close eye on our bid flow as a leading indicator of what's actually happening in the market, not what the headlines say is happening. What the numbers tell me is this: the hotel and hospitality sector is not just surviving. In most markets, it is thriving, and contractors who dismiss it are leaving money on the table.

The Bid Log Doesn't Lie

Estimating pipelines are among the most honest market indicators a contractor has. When owners stop spending money on drawings, they stop inviting bids. Architects don't produce construction documents for projects that aren't moving. For a project to land in our bid room, someone has already committed serious capital to design and development costs. That's skin in the game.

From 2021 through 2025, our invitations for hospitality related work, new builds, full renovations, brand conversions, and amenity repositionings, grew steadily year over year, with the exception of a brief pause in early 2023 when financing markets tightened. That pause lasted about two quarters. Then the phones started ringing again. The industry's data confirms what we were seeing on the ground: in the second quarter of 2024, the total U.S. hotel construction pipeline reached a record 6,095 projects representing 713,151 rooms, growing 9% year over year. That is not a sector on the ropes.

The Air Travel Engine That Keeps Running

The hospitality industry does not exist in a vacuum, and any contractor paying attention to this sector has to understand what fills those hotel beds. For the U.S. domestic market, the answer starts at the airport. Air travel has been the single most important demand driver for hotel occupancy over the past several years, and the structural dynamics of the airline industry continue to work in hospitality's favor.

Even amid economic volatility, Americans have demonstrated a persistent, almost stubborn commitment to travel. More than 119 million Americans traveled 50 or more miles during the 2024 holiday season, breaking the all time record set in 2019. The average American took three domestic trips in 2024, spending around $4,600 per traveler. Budget carriers have expanded aggressively into secondary markets, connecting smaller cities that previously had limited air service to major tourism corridors. That expansion directly supports hotel demand in markets that were underserved a decade ago, which is precisely where we are seeing some of our most active new build inquiries today.

When fares soften, as they did for stretches in 2024 and 2025 driven by fuel costs and capacity additions, the effect on hotel occupancy is almost immediate. Airline fares in June 2025 were 3.5% lower than June 2024, and adjusted for inflation, airfares are dramatically cheaper than they were a decade ago. Lower barriers to travel mean more heads in beds. Hotel owners and developers know this, and it's a material reason why capital continues to flow into the sector.

Owners Are Playing Offense, Not Defense

What's most telling from a contractor's perspective isn't just the volume of work, it's the character of it. The mix of projects we've been invited to bid has shifted meaningfully over the past three to four years. New construction remains active, but a growing share of our hospitality work involves owners repositioning existing assets: rebranding, gut renovating guestrooms and public spaces, adding amenity programming that didn't exist in the original scope, and reconfiguring food and beverage operations to compete with a more demanding traveler.

Brand conversion activity reached record high project totals in 2025, closing the third quarter with 1,477 projects comprising 148,035 rooms, up 18% by projects and 22% by rooms year over year. Those conversions represent real construction work. A brand conversion is rarely a coat of paint and a new flag out front. It involves guestroom renovations, lobby reconfigurations, back of house upgrades, and compliance with new brand standards. We've been executing these scopes with increasing frequency, and the budgets are substantial.

The amenity arms race is also very real. Rooftop bars, resort style pool decks, spa additions, fitness center expansions, EV charging infrastructure, and co working lounges are no longer differentiators at the luxury tier. They are table stakes for upper midscale and upscale properties trying to retain brand loyalty and average daily rate. Extended stay brands have become the darling of the development community, and even in that segment, owners are investing in communal amenity spaces that were unheard of in the extended stay category just five years ago.

What the Forward Pipeline Tells Us

Looking ahead, the fundamentals remain constructive. Lodging Econometrics projects 708 new hotels and 80,034 rooms will open in 2026, with accelerated growth anticipated in 2027, when 824 new hotels and 88,095 rooms are scheduled to open across the U.S. That represents sustained demand for construction services at a meaningful scale, and it doesn't account for the ongoing renovation and repositioning work running parallel to new development.

The contractors best positioned to capture this work are those who've stayed close to the hospitality sector through its cycles, who've built relationships with the ownership groups, management companies, brands, and architects that drive these decisions. Hospitality construction is a relationship business, probably more so than any other commercial vertical I've worked in. Brand standards are rigorous and owners are sophisticated. A track record of delivering on schedule within a live or adjacent operating environment matters enormously.

The hotel market isn't a safe harbor. Rising construction costs, persistent labor shortages, and a financing environment that continues to push some projects to the sideline are real headwinds. But for contractors who've invested in this sector, the demand signal is consistent and the pipeline is deep. Don't write it off. The bid invitations will keep coming.

Craig Plescia is the founder and chief executive of Plescia Construction & Development, a commercial general contracting and construction management firm headquartered in Morristown, N.J., with regional offices in New York, Florida, and Texas. He has spent two-plus decades delivering projects across the hospitality, corporate interiors, healthcare, retail, and institutional sectors. Prior to founding Plescia C&D, he held leadership roles at several prominent New York area construction firms, building a career grounded in complex interior and ground up commercial work. His firm operates across multiple regions with a focus on high accountability delivery for institutional and private sector clients.