A New Wave of Hotel Growth: What Expanding Developments in U.S. Cities Signal for Travel and Real Estate

In the years following the pandemic-driven shock to global travel, the U.S. hospitality industry has been navigating an uneven and cautious recovery. Now, fresh development projections suggest that confidence is returning in a more concrete way: bricks, mortar, and thousands of new hotel rooms. Among major metropolitan areas, and are expected to lead the nation in hotel room openings in 2026, a sign that investors, developers, and operators are once again betting on long-term demand for both leisure and business travel.

This anticipated expansion is more than a real estate story. It reflects shifting travel patterns, evolving urban economies, and changing expectations about how and why people move around the country. Understanding why these cities are at the forefront—and what it means for workers, travelers, and local communities—offers insight into the future of hospitality in the United States.

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The Long Road Back for Hospitality

The hospitality sector was among the hardest hit industries during the COVID-19 pandemic. Hotel occupancy rates collapsed in 2020, business travel stalled, and tourism-dependent cities saw steep revenue losses. Development pipelines were frozen as lenders grew cautious and construction costs became volatile.

Yet unlike some industries permanently reshaped by remote work or digital substitution, travel never disappeared—it was deferred. Leisure travel rebounded first, driven by pent-up demand and a renewed emphasis on experiences. Business travel followed more slowly, but conventions, trade shows, and corporate meetings gradually returned, albeit with new formats and expectations.

By 2024 and 2025, occupancy and revenue per available room (RevPAR) in many U.S. markets had stabilized or surpassed pre-pandemic levels. That recovery laid the groundwork for renewed hotel development, which typically lags demand by several years due to planning, financing, and construction timelines. The wave of openings projected for 2026 is, in many ways, the delayed physical expression of that recovery.

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Why New York City Leads the Pack

New York City has long been one of the most important hotel markets in the world. Before the pandemic, it consistently ranked among the top U.S. cities for international tourism, corporate travel, and major events. Although it experienced one of the sharpest downturns in 2020, its rebound has been equally notable.

Several factors explain why developers are again focusing on New York:

1. Diverse and resilient demand
The city benefits from a uniquely balanced mix of leisure tourists, international visitors, business travelers, government travel, and event-driven demand. Broadway shows, museums, sports, finance, media, healthcare, and higher education all contribute to year-round hotel occupancy.

2. Regulatory clarity after years of uncertainty
For much of the 2010s, hotel development in New York was slowed by zoning changes and concerns about oversupply. In recent years, clearer regulatory frameworks and adaptive reuse policies—especially for underused office buildings—have opened new paths for hotel projects.

3. Global capital interest
New York remains a magnet for international investment. Even during periods of economic uncertainty, global funds view Manhattan and surrounding boroughs as long-term, stable places to deploy capital. Hotels, especially branded properties with strong operators, fit that profile.

4. The return of group and international travel
Large conventions, fashion events, and international tourism have been critical to New York’s hotel recovery. As global travel normalizes, developers are positioning new inventory to meet demand that existing hotels may struggle to absorb during peak periods.

The result is a pipeline that includes both new-build properties and conversions, ranging from luxury and lifestyle hotels to more moderately priced options aimed at domestic travelers.

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Phoenix and the Rise of Sun Belt Hospitality

While New York’s leadership may seem predictable, Phoenix’s prominence in hotel development highlights a different but equally important trend: the rise of Sun Belt cities as major travel and investment destinations.

Phoenix’s projected hotel room growth reflects several converging dynamics:

1. Rapid population and business growth
The Phoenix metropolitan area has been one of the fastest-growing regions in the country for more than a decade. New residents, corporate relocations, and expanding healthcare and technology sectors have boosted year-round lodging demand.

2. Strength in leisure and outdoor tourism
Arizona’s climate, desert landscapes, and proximity to national parks make Phoenix a hub for leisure travelers. Golf tourism, resort travel, and seasonal visitors—often escaping colder northern winters—support both urban hotels and surrounding resort developments.

3. Expanding convention and sports infrastructure
Investments in convention centers, professional sports venues, and large-scale events have strengthened Phoenix’s appeal for group travel. Major sporting events and festivals create spikes in demand that encourage new hotel supply.

4. Lower development barriers
Compared with coastal gateway cities, Phoenix generally offers lower land costs, more flexible zoning, and a faster entitlement process. These factors make it easier for developers to move projects forward, even amid higher construction costs nationwide.

Together, these conditions have transformed Phoenix from a primarily regional market into a nationally significant hospitality destination.

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Broader Investment Trends in Hospitality Real Estate

The focus on New York City and Phoenix also reflects broader shifts in how investors view hospitality assets.

For much of the past decade, hotels were considered higher-risk than other commercial real estate sectors like apartments or industrial properties. The pandemic reinforced that perception. However, recent performance has prompted a reassessment.

Hotels offer several advantages in the current environment:

• Daily repricing power, allowing operators to adjust rates in response to inflation
• Strong recovery in leisure demand, which has proven more resilient than expected
• Opportunities for repositioning and branding, particularly through lifestyle and boutique concepts

Investors are increasingly selective, favoring markets with strong long-term fundamentals rather than chasing short-term rebounds. The emphasis on cities like New York and Phoenix suggests a preference for locations with diversified demand drivers and population growth.

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Impact on Workers and Local Communities

Hotel development does not occur in a vacuum. New projects bring tangible effects—both positive and challenging—to the people who live and work in host cities.

Job creation is one of the most immediate impacts. Construction generates short-term employment, while completed hotels create permanent roles in operations, management, food service, housekeeping, and maintenance. For cities recovering from pandemic-related job losses, this can be a meaningful boost.

Economic spillovers extend beyond hotel walls. Increased visitor traffic supports restaurants, retail, transportation providers, entertainment venues, and cultural institutions. Local tax revenues from hotel stays often fund public services and tourism promotion.

At the same time, community concerns can arise. Residents may worry about increased congestion, rising rents, or the loss of neighborhood character, particularly when hotels replace residential or mixed-use properties. In some markets, debates continue over how to balance tourism growth with housing affordability.

Successful development increasingly depends on thoughtful planning—projects that integrate with neighborhoods, respect local needs, and contribute to broader urban goals rather than simply maximizing room counts.

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What Travelers Can Expect

For travelers, the coming wave of hotel openings promises more choice and, potentially, more competitive pricing. New supply often brings:

• Modern room designs and upgraded technology
• New brands and lifestyle concepts tailored to changing preferences
• Expanded options across price points

In markets like New York, additional inventory may help ease high room rates during peak seasons. In Phoenix, it could support larger events and conventions without straining existing hotels.

However, increased supply does not automatically mean lower prices. Demand growth, inflation, and operating costs will continue to influence rates, especially in high-demand periods.

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Looking Ahead: A Cautious but Confident Outlook

While projections for 2026 hotel openings are optimistic, developers and investors remain cautious. Financing costs, labor shortages, and construction expenses continue to pose challenges. Any significant economic slowdown could delay or reshape projects still in the planning phase.

That said, the scale of development expected in cities like New York City and Phoenix suggests a belief in the long-term relevance of travel, face-to-face business, and urban experiences. Rather than signaling a return to pre-pandemic norms, this new wave of hotel growth reflects an industry adapting to changed realities—more flexible travel patterns, blended business and leisure trips, and a renewed emphasis on experiences.

If current trends hold, the hotels opening in 2026 will not just accommodate travelers. They will stand as markers of how U.S. cities and the hospitality sector have redefined growth, resilience, and opportunity in a post-pandemic world.