Oversupply in Pennsylvania's Marcellus Shale region leads to drop in occupancy

Due to increased drilling for natural gas in Pennsylvania's Marcellus Shale region there was in increase in hotel development for the area. However, research from Penn State is showing that the area has been overbuilt, as shown by faltering occupancy.

Marcellus drilling operations generated approximately $685 million in hotel revenues and added an extra 1,600 new hotel jobs since 2006, according to the researchers, who report their findings in the International Council on Hotel, Restaurant, and Institutional Education Penn State Research Reports. However, the latest figures show that demand for rooms may be decreasing. For example, in 2012, demand was flat and occupancy was down 4.1 percent.

If demand continues to decrease, the older, non-franchised hotels may be the most vulnerable to bankruptcy and closure, according to Daniel Mount, an associate professor in hospitality management. Of the 14 hotels that closed between 2006 and 2012, nine did not have a national franchise. The average age of the 14 closed hotels was more than 38 years old.

Virtual Event

HOTEL OPTIMIZATION PART 2 | SEPTEMBER 10 & 24, 2020

Survival in these times is highly dependent on a hotel's ability to quickly adapt and pivot their business to meet the current needs of travelers and the surrounding community. Join us for Optimization Part 2 – a FREE virtual event – as we bring together top players in the industry to discuss alternative uses when occupancy is down, ways to boost F&B revenue, how to help your staff adjust to new challenges and more, in a series of panels focused on how you can regain profitability during this crisis.


The flat rate contrasts with the explosive growth of hotel construction during the early stages of the drilling boom. Hotel developers built 65 hotels in the drilling region, which is a far greater number than national trends would suggest for hotel development, said Mount, who worked with Timothy Kelsey, professor of agricultural economics and co-director of the Center for Economic and Community Development and Kathryn Brasier, associate professor of rural sociology.

Alternative housing may explain some of the lower demand, as well, said Mount. Some companies that originally assigned workers to hotel rooms may now be housing them at alternative sites, such as apartment complexes or mobile homes, further reducing demand for hotel space.

Suggested Articles

The project encompassed a real-time, two-way integration between Infor HMS and Glowing’s Digital Engagement Cloud at Mandarin Oriental hotels.

Two upcoming hotels (and one historic property) in sunshine destinations have announced new leaders for their F&B programming.

For the week of Sept. 6-12, occupancy reached 48.5 percent, down 1.6 percent from the previous week.