Tucson’s hotel supply and investment interest have evolved in the past few years. From the addition of boutique hotels in the downtown area to new extended-stay options near hospitals and office parks, the city is experiencing one of its most dynamic hotel development cycles in decades. Over the past several years, many economy and midscale hotels have been converted to other uses, including multi-family and affordable housing, as well as shelters and transitional housing; this trend has been prevalent in several major markets, including nearby Phoenix. On the other hand, high-end hotels have been either built new or converted from other uses.
 
The following table shows a snapshot of new hotel products introduced in Tucson during the last two years. These projects span upscale lifestyle hotels, economy and midscale extended-stay concepts, and value-focused economy brands, signaling confidence across multiple price tiers and traveler types. Nationally, interest rates remain elevated, posing a challenge to new construction. However, traditional lenders are selectively returning for high-performing, branded projects. Alternative debt sources such as debt funds and specialty finance companies are filling the gaps. Conversions and adaptive reuse projects are gaining momentum due to lower construction risk. New hotels planned for the city over the next few years are illustrated on the map below. New hotel developments are playing a key role in creating more foot traffic, activating nightlife, and supporting local businesses throughout the city. Boutique properties like The Leo Kent are breathing new life into historic buildings and contributing to the vibrancy of the downtown core. Beyond downtown, projects like the proposed Tempo by Hilton will anchor a mixed-use development, helping to elevate surrounding neighborhoods and create destination-driven experiences. As a whole, Tucson’s hospitality growth supports thousands of jobs in the construction, operations, and service industries, while introducing greater year-round visitor diversity to the market.

For years, Downtown Tucson has lacked a large, full-service hotel capable of supporting major citywide events. The redevelopment of the former Hotel Arizona into a modern, full-service, 290-room property is expected to fulfill this need. Large-scale events, such as the Tucson Gem and Mineral Show and the Convention of Jehovah’s Witnesses, will benefit directly from the additional capacity, as attendees seek walkable, centralized accommodations near the urban center and Tucson Convention Center.

The growth of Tucson’s hotel market closely mirrors the expansion of the city’s major employers. Companies like Raytheon, Lockheed Martin, Caterpillar, Honeywell Aerospace, Amazon, and Hexagon are driving consistent demand for hotel rooms, as they bring employees, contractors, and corporate visitors throughout the year. Given the ongoing expansion of operations, the need for high-quality, strategically located hotels is becoming increasingly essential.

Furthermore, the University of Arizona continues to invest into its campus and its expansion of research, media, and education opportunities that will continue to grow the student body and visitation to the university. The University of Arizona Tech Park supports 6,500 jobs and has a $2-billion impact on the state. In January 2024, construction began in the park on a new 61,500-square-foot facility for Arizona Public Media. Beyond attracting highly skilled workers to live and work in Tucson, the park draws many university researchers, students, and corporate visitors to promote innovation.

Overall, the current pipeline of the new hotel supply in the Tucson market is well positioned to support the continued growth of both corporate and group demand. Whether you're a developer looking for your next investment, a lender assessing market viability, or a Tucsonan curious about your city’s transformation, this hotel boom is worth watching.

At HVS, we turn data into powerful insights that drive your success. Our strategic positioning within local markets empowers us to conduct primary interviews with key market participants. This approach ensures we obtain real-time insights and current data for each market we operate in, giving you a distinct competitive edge. For inquiries or data requests related to Tucson hotel development, contact Zabada Abouelhana, via email or phone at +1 (314) 280-2017, or Trey Osadchey, via email or phone at +1 (314) 857-8344.

This article was originally published in the August 2025 edition of Trend Report.