Lodging Econometrics’ (LE) Q2 2024 U.S. Hotel Construction Pipeline Trend Report paints a picture of robust growth and strategic focus. With a significant concentration of projects scheduled to start in the next 12 months and early planning stages, particularly in the upscale and upper-midscale segments, the industry appears poised for substantial new supply growth. The widespread distribution of these projects across numerous markets, coupled with the strong presence of established brands, suggests a confident outlook for the hospitality industry. As economic conditions evolve, particularly with anticipated interest rate reductions, we can expect to see many of these planned projects move swiftly into the under-construction phase. This trend not only indicates a recovery from recent challenges, but also points to a transformative period ahead for the U.S. hotel landscape.
As we look ahead, LE’s report offers a detailed forecast of the anticipated supply growth. Specifically, LE’s data shows that projects scheduled to start construction in the next 12 months and projects in early planning are showing significant growth. Projects scheduled to start construction anytime in the next 12 months total 2,350, accounting for 268,378 rooms. This represents a 5% increase in projects and a 3% increase in rooms compared to the same period last year.
Even more notable is the growth in projects at the early planning stage. This project stage saw a substantial increase, with 2,574 projects totaling 297,162 rooms. This marks a 13% rise in projects and a 15% increase in rooms year-over-year.
Combined, these two stages account for 81% of the projects (or 4,924 projects of the 6,095 projects) in the total construction pipeline and 80% of the rooms (or 565,540 rooms of the 713,151 rooms) in the total construction pipeline.
Hotel projects within the upscale and upper-midscale chain scales are leading the way. These two chain scales combined account for a substantial majority of projects. Specifically, they represent 68% of all projects and 65% of rooms among two categories: those that are scheduled to start within the next 12 months and those in the early planning stages of the pipeline. This concentration in the upscale and upper-midscale segments suggests strong demand for these types of accommodations, driven by traveler, investor and lender preferences.
While major metropolitan areas such as Dallas, Atlanta, Nashville, Austin, Phoenix, Los Angeles and Orlando are leading the way with the highest concentration of upcoming hotel projects, the growth is far from limited to these key markets. In fact, the pipeline’s reach is impressively broad, with 96 distinct markets across the U.S. each boasting 20 or more projects in either the early planning stage or scheduled to break ground anytime within the next year.
Lodging Econometrics (LE) is the leading source for comprehensive, actionable global hotel development insights, decision-maker contact details, and exceptional customer service. Our Business Development Database Programs and Lodging Industry Trend Reports provide in-depth information on hotel construction, planned renovations, and brand conversions, segmented by project stage, franchise company, brand, market, and other key metrics. To learn how LE can support your business in accelerating revenue growth and expanding market share, reach out to us at 603-431-8740, ext. 0025 or [email protected].
