How Long Term Land Constraints Protect Hospitality Investments

Why Future Competition Is Unlikely — and Why That Provides Downside Protection

In luxury hospitality, few fundamentals matter more than the long-term relationship between supply, land availability, and regulatory control. Markets that restrict development—intentionally or structurally—create natural insulation for existing operators. For investors, this translates into something rare in hospitality: downside protection rooted not in financial engineering, but in geography, policy, and scarcity.

Sedona is a textbook case of this dynamic. But it is not alone. Aspen and Jackson Hole offer instructive parallels—mature examples of what happens when a destination’s natural and regulatory limits create a permanent cap on future competition.

1.Geography Creates the First Boundary — and It’s Permanent

Jackson Hole: Only 1.5% of Land Available for Private Ownership

Few luxury destinations illustrate geographic constraint as clearly as Jackson Hole. With only 1.5% of total acreage available for private ownership, the vast majority of the region is locked up in National Park lands, conservation zones, and federal holdings. This is not a temporary condition; it’s a structural feature of the region. [keycrew.co]

The result is a hospitality landscape where meaningful new supply is almost impossible to introduce—protecting existing operators from future competitive pressure.

Sedona: Surrounded by National Forest and Riparian Protections

Sedona’s land base is similarly restricted. Large swaths of the area are adjacent to Coconino National Forest and environmentally sensitive riparian corridors protected under the city’s Land Development Code, which is specifically designed to preserve scenic beauty and limit intrusive development. [sedonaaz.gov], [redrocknews.com]

Geography is not something capital can overcome. And in hospitality markets like these, it creates permanent barriers to new inventory.

2. Regulatory Frameworks Reinforce Scarcity

Sedona: A Highly Protective Land Development Code

Sedona’s regulatory environment amplifies its natural constraints. The city’s Land Development Code emphasizes environmental protection, strict design standards, and low-density planning—all of which make new development both difficult and slow to achieve. [sedonaaz.gov], [redrocknews.com]

Even large-scale mixed-use proposals are subject to multi-year review cycles, and many historically have been rejected or withdrawn due to environmental or community concerns.

Jackson Hole: A Two-Phase, MultiBody Approval System

Major developments in Jackson Hole must navigate a two phase approval process, with months of reviews by the Design Review Committee, Planning Commission, and Town Council before construction can begin. The process has recently triggered construction moratoriums for large proposals while impact studies are conducted. [news.const...onnect.com]

This reinforces what geography already dictates: new supply enters extremely slowly, if at all.

Aspen: Protective Zoning and Land Use Controls

Aspen’s zoning map and Land Use Code are structured to maintain long-established community values, limiting buildable area, density, and redevelopment opportunities. Large projects face significant design constraints and review requirements through Planning & Zoning, ensuring that supply remains intentionally capped. [Planning &...Aspen, CO]

Across all three markets, regulation acts not as an obstacle to be overcome, but as a structural moat protecting existing hospitality assets.

3. High Demand + Constrained Supply = Durable Pricing Power

Teton County: $1.74 Billion in Annual Visitor Spending

With $1.74 billion in visitor spending in 2024, Teton County remains one of the highest yield tourism economies in the country, despite its cap on new development. [travelandt...rworld.com]

This imbalance—high demand, permanently constrained supply—is the reason hotels in Jackson Hole maintain consistently strong ADR and RevPAR, even as other markets face compression.

Sedona: Millions of Visits with Minimal New Luxury Supply

Sedona receives over 3.16 million annual visits yet has added very few new luxury keys in recent decades. This has created a durable gap between what travelers demand and what the market can physically provide. [redrocknews.com]

Long-term, this supports:

Higher ADRs
More predictable occupancy
Resilient RevPAR, even in softer cycles
Demand may fluctuate, but supply cannot expand—anchoring pricing power.

4. Future Competition Is Unlikely — by Design, Not by Market Conditions

This is the core investor insight:

In land-constrained markets, competition is capped not by business performance, but by forces external to the hospitality cycle.

Even if:

financing becomes more available
land values shift
tourism demand increases
new operators seek to enter the market

They face constraints that make entry nearly impossible:

no available land
environmentally protected terrain
stringent zoning
lengthy or uncertain entitlement paths

These aren’t cyclical hurdles. They are structural and durable.

For investors, that means existing assets operate within a protected competitive field.

5. Investor Takeaway:

Scarcity Creates Natural Downside Protection
Hospitality is often viewed as a cyclical asset class. But in markets where land is permanently restricted, a different dynamic emerges:
Limited future supply controls competitive risk
Regulatory and geographic barriers prevent saturation
Pricing power becomes more resilient across cycles
Assets behave more like irreplaceable real estate than typical hotels

Sedona, like Aspen and Jackson Hole, benefits from this phenomenon—but remains earlier in its growth curve, meaning the upside has not yet been fully priced into the market.

For long-term investors, that combination—early-stage luxury + permanent supply constraint—creates an uncommon form of downside protection. Hospitality assets in such markets don’t compete against new inventory. They compete only against time.