Hotel development across the United States is facing uncertainty with demand volatility, interest rates, construction costs, labor shortages and mores. Developers are targeting markets with strong economic fundamentals, population growth and high travel demand. Certain cities are leading the way, driven by business expansion, tourism and favorable development conditions. Urban centers and Sunbelt cities are dominating the pipeline and the experts’ choices for the top development markets right now.
“They lead the pack for a number of reasons,” said Ophelia Makis, research manager at JLL Hotels and Hospitality Group. “They all experience strong economic growth, which attracts business travelers as well as leisure travelers.”
These markets have a high demand for new rooms, with occupancy rates above 70 percent and RevPAR growth expected, said Ric Mandigo, consultant for CBRE Hotels Advisory. “They also have a limited supply of new rooms, making them attractive for developers,” he said. “Luxury and upper-upscale segments are in high demand, with full-service, upper-upscale CBD [central business district] properties being the most attractive. Investors are also looking for markets with strong demand growth, limited supply and high occupancy rates.”
Luigi Major, managing director of HVS Americas, believes the markets that are doing well have a mix of growth dynamics but also importantly have business-friendly policies.
Bruce Ford, senior vice president, director of Global Business Development at Lodging Econometrics, believes the “smile” markets is where the hotel industry is in the real estate cycle. “So the Sunbelt will be first from Phoenix to Orlando,” he said.
These top development markets have not changed in the last three years and are driven by healthy demand from leisure, corporate transient and group demand drivers, according to Jan Freitag, national director, hospitality market analytics at CoStar Group. “I don’t think these will change as construction costs are high and will get higher because of tariffs, and construction interest rates will still be elevated,” he continued.
Dallas
Dallas has the most hotel projects scheduled to start anytime in the next 12 months, with 80 projects, totaling 8,890 rooms, according to Lodging Econometrics most recent U.S. Hotel Construction Pipeline Trend Report. The Dallas market is expected to lead in new hotel openings in 2026, with 26 new hotels and a total of 2,611 rooms.
“Texas has seen a reasonable increase in population size but also a lot of business growth,” Ford said. “So as a result, you get this wave of construction that goes further and further out into suburbia. As those areas get developed with residential, shopping malls, movie theaters and things like that that in the outer rim, you get hotels as a result of that growth.”
Miami
The Miami area is capitalizing a lot of appeal for its beach destinations and growing importance as an international business and tourism market. “It is a top gateway market so it attracts a lot of business and tourists,” Ford said.
The city is host to a variety of forthcoming sporting events, like Formula One, the Super Bowl and others. “Next year, the FIFA World Cup will be hosted in Miami, New York City and Dallas so there's just continued focus on these markets,” Ford continued. “These cities are always getting these major group events so long-term, they're going to attract a lot of development interest.”
Nashville
The Nashville hotel market has a variety of evergreen demand generators. One is that it's state capital so it has a lot of government, government agencies, state agencies, Freitag said. The market has 13 universities—the big three being Belmont, Vanderbilt, Lipscomb—and then a bunch of other smaller ones. Healthcare is also a large demand driver as well.
“Music City, USA is the brand name of the city, so it has a lot of connections and a lot of demand, not just from people making music, but also from the fans who come to Nashville to see the music,” he continued.
The geographic location of the city allows easy highway, river and air access to the city, which contributed to housing many logistics companies in the area. “It’s a super interesting market because within an eight-hour drive, you can be in touch with about 65 percent of the U.S. population,” Freitag said.
New York City
New York City is actually at the top of JLL’s development list and not just for its portion of rooms under construction versus the total market size, Makis said. “It is also for the absolute number of rooms, it's almost 9,000 rooms under construction, which is huge,” she continued. “A lot of that, of course, is backlog from previous years. It's a tough city to develop in, so it kind of makes sense.
“New York City is just a global hub for business and tourism, so it's going to maintain that top spot for a really long time,” she continued.
Phoenix
At the end of the first quarter 2025, Phoenix has 126 hotels in the construction pipeline, according to Lodging Econometrics' most recent U.S. Hotel Construction Pipeline Trend Report.
The Phoenix area has experienced continued population growth, business relocations and the advancement of multi-billion-dollar projects, such as TSMC and LG, according to Zabada Abouelhana, senior director at HVS. “The area has diverse demand generators, such as strong commercial, leisure demand, [as well as] sports groups, creating strong demand and rates,” she continued.
Up and Coming Markets
Makis believes California’s wine country will be an upcoming prosperous hotel development market. “The Napa Valley and Sonoma markets are more global luxury hot spots, given they have those renowned vineyards and very close proximity to the Bay Area,” she said. “So they're attracting a lot of demand, not just for those but also for the demand drivers from San Francisco, given its bottom in its performance, and it's going to continue to rebound, that's going to bring a lot of interest to markets in close proximity, like California, wine country.
There's three hotels under development now in the area — very experience-forward properties, Makis said. The properties are all luxury hotels as well.
While a year ago, Ford would have suggested Florida would have been a bigger up and coming market but the state is now highly crunched by the tourism decline so he now said the San Jose, Calif. market is ripe for a forthcoming boom. “The Northern California tech corridor is going to impact with the AI tech revitalization,” he said. “There's plenty of projects up there. With employees going back to the offices there, there's office redevelopments there so therefore there are hotels being developed. It's an underserved market.”
Ford also believes there will be development in the Los Angeles area with the upcoming Olympics being held in that city. “We'll see an acceleration there, which is also some of the reason that the Inland Empire is continuing to get more investment too.”
In the next five years, Freitag think the markets that are now a bit “unloved” could see a renaissance, first and foremost being San Francisco and Boston but St. Louis, Minneapolis and Orange Country, Calif. could also see grow.
Mandigo categorized markets a bit differently into four categories: Strong returning demand in California (San Francisco, Sacramento, Anaheim and San Diego); High barriers to entry markets (Boston, New York City and Hawaii); Continued demand in Florida (Orlando, Fort Lauderdale and Miami); and a dark horse market with strong demand and limited supply growth (Salt Lake City).
“These markets have a strong demand for new rooms, limited supply and high occupancy rates, making them attractive for developers,” he said.