HENDERSONVILLE, Tennessee—Population growth drives a variety of economic activity. This article examines the relationship of hotel guestroom and population density and growth for each of the United States.
Population counts are available from the U.S. Census Bureau, and room counts are based on our STR Census Database. (STR is parent company of Hotel News Now.)
The U.S. Census is updated with a full population count every 10 years. It is estimated every year. The STR Census is updated daily. During the last 12 years, the census and room counts have developed as follows:
So, on average, the U.S. hotel industry is offering roughly 150 rooms per 10,000 people. It is interesting to note that in the decade between 2000 and 2010 the population grew at 9.7% but the total room count grew almost 50% faster at 13.8%. In the last two years between 2010 and 2012 the lack of new construction financing caused the growth in population to exceed the growth in rooms. This then had an adverse effect on room counts per 10,000 people, which declined slightly.
When examining the room counts per 10,000 people by state, a wide variance in room counts emerges. Only Rhode Island offers less than 100 rooms, whereas four states offer more than 400 rooms. Not surprisingly, the Nevada numbers are skewed upward by the presence of casino hotels in Las Vegas and other gambling jurisdictions. The room count per 10,000 people there soars to more than 700. A majority of 37 states offer between 100 and 200 rooms per 10,000 people.
The table seems to imply a “natural equilibrium” of between 100 and 200 rooms per 10,000 people but also features outliers that offer many more rooms. This could point at areas that are overbuilt.
Obviously, the states that offer more than 400 rooms are very attractive to tourists, as evidenced by the presence of Washington, D.C., Hawaii and Nevada.
Wyoming stands out on that list as a state that offers 405 rooms per 10,000 people and would not normally come to mind as a major hotel destination. But because the state offers some 23,000 rooms (ranked 41st) and is the least populated in the U.S. with some 576,000 inhabitants, the density ratio is unexpectedly high.
The picture changes slightly when looking at room density for the top and bottom 10 most populated states.
As shown, the more people live in a state, the fewer rooms are offered in relation to the population. In fact, the larger states are actually growing population but losing hotel room density. Smaller states that already offer more than 80 additional rooms per 10,000 people are growing room density despite the general new construction drought.
In sum, the need to serve population and visitors alike has caused hotel construction to increase over the last decade. Only most recently the population has continued to grow while hotel development has eased, leading to a decline in hotel density per 10,000 people. As the American economy increases and new construction lending increases, so will the amount of rooms.
It will be interesting to watch where these rooms are being built, either in the states with an already high density or in states that have some more room to catch up to the U.S. average.