Phoenix Hospitality Market Report

Full-service hotels lead as new supply ramps up. Phoenix will record its fastest supply growth since 2020 this year, restraining hotel performance amid modest travel demand. Caution among price-sensitive guests likely leaves limited- and select-service hotels most exposed, as each segment saw occupancy fall over 300 basis points last year. In contrast, higher-income travelers should sustain full-service demand, which still posted modest occupancy gains, reinforcing performance in Tempe and Scottsdale, where new supply remains limited. Rate-sensitive nodes in North Phoenix and around Sky Harbor International Airport posted the sharpest demand declines last year. Yet, newly launched air service to Taipei should bolster TSMC-linked travel and help absorb new rooms. Meanwhile, the West Valley and the Mesa-Chandler-Gilbert area are expected to see the largest occupancy declines in 2026 amid heavy deliveries, led by the 1,100-key VAI Resort in Glendale and select-service openings in the East, even as corporate growth continues to support bookings.