The extended-stay hotel category has traditionally played a significant role in the hospitality industry. In recent years, demand for this segment has grown considerably, driven in part by the rapid development of data center construction projects across various regions of the United States, including Texas, Virginia, and Georgia. Currently, such projects are quickly expanding into new and emerging markets throughout the country.

The Impact of Data Center Construction on the Hospitality Sector

Data center construction is a major driver of demand for extended-stay accommodations nationwide, especially during the building phase when large numbers of workers need housing. Over the past decade, investments in U.S. data center infrastructure have increased substantially. According to forecasts, annual investments in this sector are expected to rise by 116% from 2024 to 2027, growing from $53.2 billion to $118.4 billion.

In recent years, Atlanta, Phoenix, and Austin have become key markets for data center construction. States such as Georgia, Texas, Virginia, as well as Pennsylvania and Illinois, are seeing a surge in such projects, which is accompanied by increased demand for extended-stay hotels.

Demand Characteristics and Long-Term Prospects

The demand for extended-stay accommodations linked to data center development is uneven. In some regions, hotels located near new facilities are experiencing higher occupancy rates, while in others, the impact of infrastructure projects on the hotel business is minimal. The lack of a permanent workforce at these sites after construction raises questions about the long-term sustainability of such demand.

In some cases, once construction is complete, demand for accommodation can drop sharply, as only a limited number of employees are needed to operate data centers. However, in certain regions, data center construction stimulates the development of residential neighborhoods, the creation of new jobs in related industries, and population growth, all of which support ongoing demand for extended-stay hotels.

Clustering and Regional Market Development

The formation of data center clusters, especially through phased construction, creates a stable and high demand for accommodation, attracting the attention of hotel developers. These regions often see infrastructure upgrades, network expansion, and the establishment of regulatory frameworks to support new projects.

One of the key growth markets is the Dallas–Fort Worth area, where Texas is projected to become the world’s largest data center market by 2030. Significant growth is also noted in Columbus (Ohio), while Northern Virginia and Atlanta continue to see the expansion of extended-stay hotel chains.

Assessing Potential and Development Strategies

Companies are evaluating expansion opportunities in markets with active data center construction, taking into account recent trends in population growth, commercial activity, and the balance of supply and demand. An important factor is the presence of "cluster strength"—the economic gravity created by large infrastructure projects.

Special attention is also given to "secondary impact" markets—key nodes in the supply chain for data centers, where rapid growth in manufacturing centers related to the servicing and operation of new facilities is expected.

Demand Structure and Hotel Types

Demand for extended-stay hotels near data centers comes from a wide range of guests—from laborers to specialists—requiring diverse accommodation formats. Expats and professionals tend to prefer hotels with higher service levels, while workers with both technical and manual skills often opt for comfortable yet affordable housing.

The greatest development potential in this segment is seen in quality midscale hotels, as much of the existing supply was built 15–20 years ago and now requires renovation.

Prospects and Limitations

Despite significant growth opportunities, extended-stay demand related to data centers does not always guarantee stable hotel occupancy. Many workers prefer to rent apartments or private homes in the area. Long-term prospects depend on the sustainability of demand models in specific markets, which in turn shapes the strategies and caution of developers when launching new projects.

Overall, data center construction can become a significant factor in the development of extended-stay hotels, provided that stable demand models emerge in the market, supported by infrastructure development and population growth.