Top 10 U.S. Hotel Markets for New Development (Feasibility Study 2025–2027)

Introduction

In this hotel feasibility study, we analyze MMCG’s hospitality performance indicators to identify the top 10 U.S. markets best positioned for new hotel development over the next 2–3 years. Key metrics include 12-month RevPAR (revenue per available room) levels and year-over-year (YoY) growth, occupancy rates and trends, ADR (average daily rate) levels and trends, as well as room inventory changes (recent supply growth and pipeline under construction). We compare these indicators to pinpoint markets where demand is outpacing supply, creating attractive conditions for new hotel projects. All data are drawn from mid-2025 industry reports, ensuring an up-to-date, data-driven outlook.

Analysis Framework: Markets were evaluated on recent RevPAR performance and growth (a proxy for revenue potential), occupancy levels/trends (demand strength), ADR levels/trends (pricing power), and the current construction pipeline (future supply). A strong development candidate demonstrates robust RevPAR and demand growth, high occupancy (or significant upward trend), and moderate supply growth – indicating that new capacity can be absorbed. Notably, recent industry data show higher-end segments outperforming economy hotels (e.g. luxury/upper-upscale RevPAR is up +3.2% YoY vs. a -1.4% decline for economy), so markets with strong upscale demand are especially attractive. Below we present the top ten U.S. hotel markets for new development, with a ranking table and market-level insights.

Top 10 U.S. Markets for New Hotel Development (2025–2027)

The table below ranks the ten leading markets and summarizes their key performance and supply metrics:

Rank	Market	RevPAR (YoY)	Occupancy (YoY)	ADR (YoY)	Pipeline (% of Inventory)
1	New York City	$272.5 (+6.9%)	84.4% (+1.5 ppt)	$323 (+5.3%)	5.3%
2	Miami	$166.4 (+3.0%)	74.1% (+1.1 ppt)	$224.6 (+1.9%)	4.9%
3	Los Angeles	$143.0 (+2.2%)	72.9% (+2.4 ppt)	$196.3 (–0.2%)	1.8%
4	Tampa Bay	$130.9 (+12.2%)	73.9% (+7.3 ppt)	$177.2 (+4.5%)	1.4%
5	Chicago	$112.2 (+9.2%)	65.5% (+2.8 ppt)	$171.4 (+6.3%)	1.5%
6	Houston	$78.5 (+13.2%)	63.7% (+5.5 ppt)	$123.3 (+7.3%)	1.7%
7	Charlotte	$89.9 (+10.0%)	68.6% (+4.8 ppt)	$131.1 (+5.0%)	4.1%
8	Boston	$172.8 (+3.0%)	74.0% (+0.3 ppt)	$233.7 (+2.7%)	1.7%
9	Orlando	$141.9 (+2.8%)	71.6% (+0.3 ppt)	$198.1 (+2.5%)	1.7%
10	San Diego	$158.7 (+2.5%)	74.0% (+0.7 ppt)	$214.5 (+1.8%)	2.3%

Table: Top 10 U.S. Hotel Development Markets – Key Performance (12-month averages through Q2 2025) and Construction Pipeline. High growth rates and occupancy indicate strong demand, while a lower pipeline % suggests limited upcoming supply.

Source: MMCG Database

Below, we discuss each market’s performance and comparative advantages driving its development feasibility ranking.

1. New York City – Unmatched Demand & Pricing Power

New York City tops the list with by far the highest RevPAR in the nation at $272 (12-month average), up +6.9% YoY. NYC hotels operate at 84.4% occupancy, also the country’s highest, and still grew occupancy +1.5 percentage points YoY – a remarkable achievement on an already full base. This robust demand allowed hoteliers to push ADR to $323 (up +5.3% YoY), underscoring NYC’s pricing power in luxury and upscale segments.

Despite a sizeable construction pipeline of ~7,415 rooms (5.3% of existing inventory) underway, New York’s demand continues to outpace supply. The market delivered ~3,553 new rooms in the past year (about 2.6% inventory growth) with no signs of saturating demand. Occupancy remains extremely high, indicating new hotels can quickly capture business. New York benefits from diverse demand drivers – corporate, leisure, and group travel (conventions, events) – and high barriers to entry that moderate long-term supply growth. Overall, NYC’s combination of top-tier RevPAR, steady growth, and global gateway appeal makes it the premier market for new hotel development in the short term, even as developers should monitor the sizable pipeline.

2. Miami – High-End Leisure Hub with Strong Rates

Miami ranks #2 thanks to sustained high occupancy (74.1%) and one of the highest ADRs in the U.S. at $224, leading to a robust RevPAR of $166. The market’s RevPAR grew +3.0% YoY, driven by a +1.1 ppt uptick in occupancy and +1.9% ADR growth. This performance reflects Miami’s appeal as a year-round leisure and luxury travel hub, with continued post-pandemic tourism recovery and strong pricing in upscale resorts.

Miami’s supply pipeline is elevated (4.9% of inventory) – about 3,300 rooms under construction – yet this is balanced by its demand growth and global popularity. Notably, very little new supply (0.7%) opened in the last 12 months, so current occupancy levels demonstrate genuine demand strength rather than temporary oversupply absorption. Miami’s luxury hotels have led performance, capitalizing on affluent domestic and international travelers (aligned with the national trend of premium segments outperforming economy). For developers, Miami offers high RevPAR potential and strong forward bookings, though careful product positioning is needed given the sizable upcoming supply. Overall, the market’s entrenched demand drivers (beach/leisure travel, cruise industry, events) and proven resilience position it well for new upscale and luxury developments.

3. Los Angeles – Strong Fundamentals & Limited New Supply

Los Angeles secures #3 with robust occupancy at 72.9% (up +2.4 ppt YoY) and a solid RevPAR of $143. While ADR was roughly flat YoY ($196, –0.2%) – indicating pricing plateaued after previous gains – the market’s high occupancy and diverse demand base underpin its feasibility for new hotels. LA’s supply growth has been very limited: only ~1,040 new rooms opened in the past year (+0.9% inventory). The future pipeline is also modest at 1.8% of inventory (just ~2,060 rooms under construction), reflecting high development barriers (land costs, regulations) that constrain new hotel additions.

These supply dynamics mean existing hotels are running full, and any uptick in demand directly translates into higher occupancy and ADR. LA’s demand is fueled by the entertainment industry, tourism, and a recovering convention segment. With international travel rebounding, Los Angeles is poised for further ADR growth on its strong occupancy base. For developers, LA offers a large, stable market with pent-up demand and high barriers to entry – a combination that favors new projects that can differentiate (especially in lifestyle or luxury segments). Continued high occupancy indicates new capacity can be absorbed, though developers should factor in LA’s slightly softer ADR growth in the past year by focusing on product quality and unique offerings to capture rate premiums.

4. Tampa Bay – Rapid Growth and Emerging Opportunity

Tampa Bay stands out as a fast-emerging hotel market, earning the #4 spot. Tampa posted exceptional RevPAR growth of +12.2% YoY – one of the highest in the nation. RevPAR reached $131 over the past 12 months, driven by 73.9% occupancy (up a remarkable +7.3 ppt YoY) and ADR of $177 (+4.5% YoY). These figures indicate surging demand in the Tampa area. In fact, Tampa’s occupancy growth is the largest among major U.S. markets in this period, reflecting strong leisure travel, population inflows to Florida, and sporting/entertainment events boosting hotel stays.

Crucially for developers, Tampa’s recent supply growth has been moderate: about 1,375 new rooms delivered in the last year (+2.5% inventory), and the pipeline under construction is just 1.4% of existing inventory (only ~737 rooms in development). This low pipeline, combined with red-hot demand growth, means Tampa’s new hotels face little upcoming competition. The market’s comparatively lower absolute RevPAR (just over $130) signals room for further rate growth as it matures, especially since current occupancy levels are approaching those of top-tier markets. Tampa’s booming corporate relocations and a thriving leisure scene (cruise port, beaches, and cultural attractions) are driving demand across all segments. The data suggests Tampa is under-supplied relative to its demand trajectory, making it a prime candidate for new development in the near term.

5. Chicago – Rebound in Convention and Business Travel

Chicago claims the #5 rank, demonstrating a strong comeback in performance. Its RevPAR is $112, up +9.2% YoY, reflecting one of the fastest recoveries among major metros. Occupancy improved to 65.5% (+2.8 ppt YoY) with ADR at $171 (+6.3% YoY). This robust ADR growth suggests pricing power returning, likely due to a rebound in corporate and convention demand in early 2025. Notably, group and meeting-oriented hotels have seen bright spots, consistent with public company reports of strength in group travel in Q1 2025.

On the supply side, Chicago is in a favorable position: only ~912 rooms opened in the past year (a mere +0.7% supply increase). The pipeline under construction equals ~1.5% of inventory (~1,827 rooms), modest for a city of Chicago’s size. Thus, the market is not facing a supply glut. Chicago’s high-profile events (e.g. major conferences, festivals) and a revived downtown and suburban office occupancy are driving demand. With occupancy still below pre-pandemic peaks (mid-60s vs. high-70s historically), there is headroom for further improvement. The limited new supply indicates that new entrants can capture demand without oversaturation. In sum, Chicago’s combination of double-digit RevPAR growth, improving fundamentals, and constrained pipeline signals a timely opportunity for development, particularly in segments serving renewed business and convention travel.

6. Houston – Surging Recovery in an Undersupplied Market

Houston is #6, powered by a surge in RevPAR (+13.2% YoY) – the highest growth rate among the top 10. This jump brought Houston’s RevPAR to $78 (still lower absolute value, reflecting historically lower ADRs in this market). Occupancy climbed to 63.7% (+5.5 ppt YoY) and ADR to $123 (+7.3% YoY), indicating a robust recovery in demand. Houston’s rebound likely stems from multiple demand tailwinds: a recovery in corporate travel (especially energy sector and medical center activity), improved leisure visitation, and lingering hurricane-displacement demand early in the period. The data shows both occupancy and ADR growing in tandem, a positive sign of strengthening market pricing.

From a development standpoint, Houston’s appeal is that this demand surge is happening without a significant supply influx. The market added under 1,000 rooms in the last year (+0.9% supply) and has about 1,800 rooms under construction (only 1.7% of inventory). Such low supply growth amid rising demand has pushed up occupancy – a classic undersupply scenario. As a result, Houston’s occupancy gains outpaced the national average, and hoteliers lifted rates accordingly. With occupancy still in the 60s, there is room for further demand absorption before reaching the 70%+ range common in top markets, which suggests new hotels can open and ramp up successfully. Developers should note Houston’s historically cyclical nature; however, near-term fundamentals – improving demand and restrained new construction – make it one of the most favorable environments for new development in the U.S. this cycle.

7. Charlotte – Booming Corporate Demand, Watch the Pipeline

Charlotte secures the #7 spot thanks to very strong growth metrics: RevPAR increased +10.0% YoY (to ~$90), with occupancy at 68.6% (+4.8 ppt YoY) and ADR $131 (+5.0%). This high growth reflects Charlotte’s rise as a business and financial hub in the Southeast – the city is attracting corporate relocations and tech/finance sector expansion, which drive both weekday business travel and relocation-related demand. Leisure travel to Charlotte has also grown with its expanding convention center and sports events. The nearly 5 percentage point jump in occupancy indicates demand is rapidly catching up to (or exceeding) existing room supply.

However, Charlotte’s development outlook comes with a caveat: a relatively elevated construction pipeline equal to ~4.1% of current inventory (around 1,772 rooms being built). This is one of the higher pipeline ratios among the top 10 markets. About 522 new rooms (1.2% growth) opened in the past year, and the market absorbed them while still pushing occupancy higher – a positive sign. Going forward, developers in Charlotte can tap into a market with excellent momentum (RevPAR growth in double digits) and a diversifying economy, but should monitor the influx of new hotels. The pipeline concentration suggests increased competition in the next 1–2 years, especially in the Uptown and South End areas popular for development. Charlotte’s overall outlook remains very favorable – its demand growth outpaces national averages, and if the local economy continues on its current trajectory, new supply is expected to be absorbed. The key will be selecting the right segment and location to differentiate amid the upcoming additions.

8. Boston – High Barriers, Consistently High Occupancy

Boston appears at #8, bolstered by one of the highest occupancy rates (74.0%) in the country. Its RevPAR of $173 is second only to New York among these top 10 markets, with YoY RevPAR growth of +3.0%. ADR remains very strong at $234 (+2.7% YoY), reflecting Boston’s heavy skew toward upscale and luxury properties serving corporate and academic travel. Occupancy ticked up slightly (+0.3 ppt), maintaining a very high absolute level. These metrics underscore Boston’s stable, year-round demand fueled by universities, the biotech/pharma industry, medical centers, and tourism. Importantly, Boston’s group and meeting business is recovering, contributing to its solid ADR growth.

For new development, Boston’s attraction lies in its extremely constrained supply growth. Virtually no new rooms opened in the last year (+0.2% supply) and only ~1.7% of inventory is under construction (~1,073 rooms). This is a product of high barriers to entry – strict development regulations, limited land, and high costs – which have kept hotel supply tight. Consequently, existing hotels operate at high occupancies and can command premium rates. For developers able to navigate these barriers, Boston offers assured demand and pricing. New hotels can quickly achieve high occupancy given the city’s chronic room shortage during peak periods. The near-term outlook is for steady performance – not as much growth spike as some Sunbelt markets, but reliably high RevPAR. In summary, Boston’s consistent top-tier occupancy and minimal pipeline make it a highly feasible market for development, particularly for upper-upscale or luxury projects that can leverage the city’s affluent, year-round clientele.

9. Orlando – Stable Tourism Demand with Capacity for Growth

Orlando ranks #9, underpinned by its role as a mega-market for leisure and conventions. Occupancy is a healthy 71.6% (up slightly +0.3 ppt YoY), and with ADR at $198 (+2.5%), Orlando achieves a strong RevPAR around $142 (+2.8% YoY). While growth percentages are modest compared to smaller markets, it’s noteworthy that Orlando had already rebounded strongly earlier – it’s the second-largest U.S. hotel market by room inventory, and it sustained these high occupancy and ADR levels over the past year. Theme park attendance and convention center events remain robust in 2025, contributing to steady demand that kept RevPAR on an upward trajectory.

For new development, Orlando presents a case of a huge, relatively stable market with moderate new supply. About 2,768 rooms were delivered in the last 12 months (+1.9% supply) and the current pipeline is ~2,478 rooms (1.7% of inventory) – not insignificant in absolute terms, but proportional to Orlando’s vast base it is quite manageable. The market’s occupancy holding above 70% despite nearly 3,000 new rooms in a year indicates that demand growth has kept pace with supply. Orlando benefits from a diversified hotel segment mix (from economy off-highway properties to luxury resort hotels) – current data show strength especially in upper midscale to upscale properties serving families and groups. With continued population growth in Florida and major expansions at theme parks, demand is expected to grow in tandem. Orlando may not have the explosive growth rate of Tampa, but it offers developers scale and consistency: new hotels can plug into a reliable tourism engine that runs year-round (with seasonal peaks). In the short term, market demand is roughly in balance with supply growth, suggesting that well-positioned new entrants can capture market share without depressing overall performance.

10. San Diego – Sustained High Occupancy, New Supply Absorbed

San Diego rounds out the top 10, distinguished by strong occupancy (74.0%) and a high ADR of $214, yielding a 12-month RevPAR of $159. RevPAR grew +2.5% YoY, with occupancy up +0.7 ppt and ADR up +1.8%. While these growth rates are modest, they come on top of already high absolute performance. San Diego’s consistent 74% occupancy signals persistent demand driven by its leisure appeal (beaches, attractions, perfect climate) and a recovering convention calendar at the waterfront convention center. The market’s ADR in the $200+ range underscores a large concentration of upscale resorts and business-class hotels.

A key factor for San Diego is that it absorbed a wave of new supply recently while maintaining performance. About 1,912 rooms opened in the past year (+2.8% inventory) – one of the larger supply increases among top markets – yet occupancy still rose, implying strong demand growth. The current pipeline is around 1,528 rooms (2.3% of inventory) under construction, which is moderate. San Diego’s development environment is somewhat constrained by coastal regulations and community opposition, but not to the extreme of San Francisco or Boston. The recent supply additions show developers have been active, but the market’s response (flat to improving metrics) is a positive sign for feasibility. Essentially, demand (including a return of corporate groups and steady leisure travelers) has kept up with new supply, so there is little sign of oversupply. San Diego’s outlook for the next 2–3 years is stable growth. For new projects, submarkets like Downtown and Mission Bay are attractive, and given the high occupancy norm, new hotels can quickly achieve high utilization. Overall, San Diego’s combination of high baseline performance and demonstrated capacity to absorb new rooms make it a solid bet for development.

Conclusion

In summary, these top 10 markets offer a blend of strong recent performance and favorable supply-demand dynamics that position them well for new hotel development in the short term. Markets like New York City and Miami boast unparalleled RevPAR levels, reflecting strong pricing power and global demand, while Tampa, Houston, Charlotte, and Chicago are experiencing outsized growth surges, signaling opportunities to ride sustained recovery and expansion waves. Other markets such as Los Angeles, Boston, Orlando, and San Diego exhibit high occupancy with controlled supply pipelines, indicating an ability to support new entrants without eroding market-wide performance.

Developers should leverage these insights to target markets where demand growth exceeds supply growth, ensuring new projects can ramp up quickly and achieve healthy occupancy and ADR. Each of these top markets has unique demand drivers and risks (e.g. pipeline volume in Charlotte, economic cyclicality in Houston) that warrant careful feasibility analysis at the sub-market and project level. However, on a comparative basis, these ten metro areas currently provide the most attractive environments for hotel development in the United States, offering strong market-level fundamentals and competitive advantages that can underpin successful new hotel investments.

By focusing on high-growth and high-barrier markets, developers and investors can position themselves to capture outperformance as the hospitality cycle continues into the next few years. The above analysis serves as a strategic guide, but ongoing monitoring of RevPAR trends, occupancy shifts, and pipeline changes will be critical to refine market selection and timing in this dynamic lodging landscape.

Faena New York, Luxury