Hotel construction is up in Arkansas, especially in Jonesboro

Hotel construction in Arkansas rose 14% between December 2016 and December 2017, indicating a departure from a trend of decline in hotel construction nationwide, according to the hospitality industry statistics resource STR.

In 2017, Arkansas had 47 hotel projects and 4,634 rooms either in the planning stages or under construction, according to STR data. In 2016, the state had 41 projects in the works and 4,068 rooms.

“We have continued to have new hotel construction in Arkansas, and I think Jonesboro and northeast Arkansas is going to be next with a continued flurry of new construction,” said Montine McNulty, executive director of the Little Rock-based Arkansas Hospitality Association. “We’ve had success in our industry. It looks like people are looking for opportunity right now, and they’re finding it in the hotel industry.”

In the Jonesboro area in 2017, there were 10 projects and 1,255 rooms in some stage of development, with two hotels listed as under construction, according to the data. The city was listed by STR to have seven projects and 884 rooms in the works in 2016.

Cari White, chief operating officer of the Jonesboro Regional Chamber of Commerce, said the numbers could be affected by a convention center project that began in 2017 but was not completed. A separate convention center project, on the other hand, is scheduled to break ground in February, White said.

The Jonesboro A&P Commission agreed in November to give up to $2.5 million in hotel tax rebates for the proposed hotel/convention center, which is planned to be located on the Arkansas State University campus.

O’Reilly Hospitality Management is developing the 203-bed Embassy Suites hotel, and a Houlihan’s Restaurant and 40,000-square-foot Red Wolf Convention Center are also planned. Subtracting the rooms from the convention center that was not finished, Jonesboro still had the most hotel rooms under construction or in the planning phases in the state.

“Number one, it is about the growth overall that’s going on,” White said.

Jonesboro has seen growth in both its population and economy in recent years. The Jonesboro metropolitan statistical area saw its population rise to 129,858 in 2016, from 121,026 in 2010, according to the U.S Census Bureau, and the region broke sales tax collection records in 2017.

Jonesboro is getting new people and also new shops and restaurants. In the last few years, there also has been increased focus on tourist draws in the region, including biking trails, the childhood home of Johnny Cash in Mississippi County and the Hemingway-Pfeiffer Museum in Piggott.

The city also gets a good bit of its visitors from sporting events in the spring and summer. However, White pointed to a different reason behind the growth in hotel construction in Jonesboro.

“It’s probably because we were deficient on hotels for so long,” she said. “Five or seven years ago we didn’t have very many.”

STR data show demand grew 29% between 2010 and 2016, and occupancy rate increased from an average of 46.2 in 2010 to 61.1 in 2016.

AROUND THE STATE, NATION
In terms of hotel construction in other Arkansas markets, the Fayetteville-Rogers-Springdale-Bentonville metro area also showed an increase in planned hotel constructions from 2016 to 2017. The area had 10 projects and 979 rooms under construction in 2017, compared to five projects and 507 rooms, according to the data.

Fort Smith showed a slight decline in rooms under construction, with five projects and 457 rooms in the works for 2017, compared to five projects and 482 rooms in 2016.

Hotel developers in Little Rock were also less busy in 2017, according to STR, with seven projects and 717 rooms under construction, compared to the previous year, when 920 rooms making up nine hotel projects were underway.

On a national level, the number of hotel rooms under construction across the U.S. was flat year-over-year in the months of October and November, and construction declined in December. Overall, there were 179,979 rooms either in the planning stages or under construction across 1,400 hotels in December, representing a 4% decrease from the previous year and marking the largest drop in year-over-year room construction since September 2011, according to STR.

“We’ve seen three months in a row where construction numbers either decreased or remained flat, and we feel we can now call that a trend,” Jan Freitag, STR’s senior vice president of lodging insights, said in a press release. “A construction decline obviously bodes well for the current industry cycle. It appears that financing is becoming harder to obtain, and if demand growth holds, occupancy will not deteriorate as quickly or as much as anticipated.”

New York City was the construction leader in the U.S., with 12,074 rooms being built across 69 hotels. Two additional large markets reported more than 5,000 rooms under construction: Dallas (5,768 rooms in 45 hotels) and Nashville, Tenn., (5,028 rooms in 33 hotels). Of those three markets, only Nashville showed more construction activity than this time last year.