In the Q1 2023 U.S. Construction Pipeline Trend Report released by Lodging Econometrics (LE), LE analysts report that as a group, year-over-year the hotel construction pipeline has grown in the top 25 markets in the U.S.
The top five U.S. markets with the largest hotel construction pipelines at the close of the first quarter are led by Dallas with record-high project and room counts of 184 projects/21,810 rooms. Following are Atlanta with 144 projects/18,242 rooms, Los Angeles with 118 projects/19,066 rooms, Phoenix with 117 projects/16,100 rooms and Nashville with 115 projects/15,354 rooms.
Markets with the greatest number of projects already under construction at the Q1 close are New York with 54 projects/8,682 rooms, Atlanta with 26 projects/4,278 rooms and the Inland Empire of Southern California with 26 projects/2,584 rooms. Dallas has 25 projects/3,739 rooms, while Phoenix has 24 projects/5,155 rooms projects presently under construction.
Dallas has the most projects scheduled to start in the next 12 months with 70 projects/8,076 rooms, followed by Atlanta with 61 projects/7,464 rooms, Los Angeles with 45 projects/6,894 rooms, Phoenix with 45 projects/5,472 rooms, and then the Inland Empire with 41 projects/4,173 rooms.
Nationally, early-planning projects and room counts hit a new all-time high at Q1 with 2,434 projects/276,274 rooms. Year-over-year, the top 25 markets in the U.S., as a group, have seen a 10% growth in early planning projects. The markets with the most projects in early planning at the close of the first quarter are again led by Dallas with 89 projects/9,995 rooms, then Nashville with 59 projects/7,182 rooms, Atlanta with 57 projects/6,500 rooms, Los Angeles with 56 projects/9,433 rooms, and Phoenix with 48 projects/5,473 rooms.
Brand conversion and renovation activity continues to be a significant focus in the lodging industry. In the first quarter of 2023, LE recorded record-high renovation and brand conversion totals of 1,953 active projects/253,533 rooms. The markets with the largest count of combined renovation and conversion projects are Atlanta with 41 projects/4,427 rooms, Houston with 38 projects/3,969 rooms, Chicago with 34 projects/4,572 rooms, Dallas with 31 projects/3,807 rooms, then San Diego with 28 projects/4,238 rooms.
New project announcements have been slow to return to pre-pandemic project counts. However, construction starts in the total U.S. pipeline rose 20% by projects and 30% by rooms YOY.
In the first quarter, Nashville has the highest number of new projects announced into the pipeline with 14 projects/1,847 rooms. Dallas follows with 11 projects/1,576 rooms, then Atlanta with 10 projects/1,146 rooms, Austin with 9 projects/1,201 rooms and Phoenix with 9 projects/885 rooms.
LE is forecasting the top 50 markets to open 319 new hotels/42,743 rooms in 2023. LE analysts anticipate that new hotel openings will continue to rise within the top 50 U.S. markets, forecasting 327 new hotels/43,525 rooms to open through 2024.
In the 2023 forecast, analysts expect New York to lead with the highest number of new hotels to open with 43 accounting for 7,219 rooms, followed by Dallas with 14 new hotel projects/2,268 rooms, and the Inland Empire with 14 new hotels/1,377 rooms. For 2024, LE analysts forecast the Inland Empire to open the most new hotels, with 22 new hotel projects/2,191 rooms expected to open. Following the Inland Empire, Atlanta is forecasted to open 21 new hotel projects/3,356 rooms in 2024, then Dallas with 18 new hotel projects/1,973 rooms.