The following viewpoint is written by Craig Plescia, CEO 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 tender invitations keep coming.
I have been a commercial general contractor for the better part of two decades, working on hospitality projects in the Northeast, Southeast and Sun Belt. Over the past five years, a stretch that included a global pandemic, two years of record inflation, and a sustained high interest rate environment, I’ve closely followed our deal flow as a primary indicator of what’s really happening in the market, not what the headlines say is happening. What the numbers tell me is this: the hospitality industry is not just surviving. In most markets, it’s thriving, and the contractors who dismiss it are leaving money on the table.
The bid record doesn’t lie
Pipe estimates are among the most honest market indicators a contractor has. When owners stop spending money on drawings, they stop inviting bids. Architects do not produce construction documents for projects that do not move. For a project to reach our bidding room, someone has already committed serious capital to design and development costs. This is the skin of the game.
From 2021 to 2025, our calls for hospitality-related work, new builds, full renovations, brand conversions and service 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 of an hour. Then the phones rang again. Industry data confirms what we were seeing on the ground: In the second quarter of 2024, the total US hotel construction pipeline reached a record 6,095 projects representing 713,151 rooms, growing 9% year-over-year. This is not a sector on the ropes.
The Air Travel Engine That Keeps Running
Hospitality does not exist in a vacuum, and any contractor paying attention to this industry needs to understand what fills those hotel beds. For the US domestic market, the answer starts at the airport. Air travel has been the largest demand driver for hotel employment in recent 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 dogged commitment to travel. More than 119 million Americans traveled 50 miles or more during the 2024 holiday season, breaking the all-time record set in 2019. The average American took three domestic trips in 2024, spending about $4,600 per traveler. Budget carriers have aggressively expanded into secondary markets, connecting smaller cities that previously had limited air service to major tourist corridors. This expansion directly supports demand for hotels in markets that were underserved a decade ago, which is precisely where we are seeing some of our most active new construction inquiries today.
When rates soften, as they did in the 2024 and 2025 tranches due to fuel costs and capacity additions, the effect on hotel occupancy is almost immediate. Airfare in June 2025 was 3.5% lower than June 2024, and adjusted for inflation, airfares are dramatically cheaper than a decade ago. Lower barriers to travel mean more heads in beds. Hotel owners and developers know this, and it is a material reason why capital continues to flow into the sector.
Owners play offense, not defense
Most significant from a contractor’s perspective is not just the volume of work, but the character. The mix of projects that we have been invited to bid on has changed significantly over the last three or four years. New construction remains active, but a growing portion of our hospitality work involves owners repositioning existing assets: rebranding, renovating guest rooms and public spaces, adding service programming that didn’t exist in the original scope, and reconfiguring food and beverage operations to compete with a more discerning traveler.
Brand conversion activity reached a record for total projects in 2025, ending the third quarter with 1,477 projects with 148,035 rooms, up 18% by projects and 22% by rooms year over year. These conversions represent real construction work. A brand conversion is rarely just a coat of paint and a new flag on the front. It involves room renovations, lobby reconfigurations, back-of-house improvements and meeting new brand standards. We have been running these scopes with increasing frequency and the budgets are substantial.
The equipment arms race is also very real. Rooftop bars, resort-style pool decks, spa additions, gym expansions, electric vehicle charging infrastructure and co-working spaces are no longer differentiators at the luxury level. These are table stakes for mid- and high-end properties that try to maintain brand loyalty and average daily rate. Extended stay brands have become the darlings of the development community, and even in this segment, landlords are investing in community spaces with amenities that weren’t seen in the extended stay category just five years ago.
What the Forward Pipeline tells us
Looking ahead, fundamentals remain constructive. Lodging Econometrics projects 708 new hotels and 80,034 rooms will open by 2026, with accelerated growth expected in 2027, when 824 new hotels and 88,095 rooms are expected to open in the United States. This represents sustained demand for construction services on a significant scale, and does not take into account ongoing renovation and repositioning work.
The contractors best positioned to capture this work are those who have stayed close to the hospitality industry through its cycles, who have built relationships with the ownership groups, management companies, brands and architects that drive these decisions. Hospitality building is a relationship business, probably more so than any other business vertical I’ve worked in. Brand standards are rigorous and owners are sophisticated. A track record of on-time delivery in a live or adjacent operational environment is very important.
The hotel market is not a safe haven. Rising construction costs, persistent labor shortages and a financing environment that continues to sideline some projects are real headwinds. But for contractors who have invested in this sector, the demand signal is consistent and the pipeline is deep. Don’t write it down. Tender invitations will keep coming.
Craig Plescia is the founder and CEO of Plescia Construction & Development, a commercial general contracting and construction management firm based in Morristown, NJ, with regional offices in New York, Florida and Texas. He has spent more than two decades delivering projects in the hospitality, corporate interiors, healthcare, retail and institutional sectors. Prior to founding Plescia C&D, he held leadership positions at several prominent construction firms in the New York area, building a career based on complex and commercial interior work. His company operates in several regions with a focus on providing high accountability for institutional and private sector clients.
