Hotel development across the U.S. saw an impressive growth in the first quarter, touching an all-time high in projects compared to the previous year. According to the latest report of the U.S. hotel construction pipeline trend report from Lodging Econometrics (LE), there are 6,065 projects with 702,990 rooms in the pipeline, representing a 9% YOY and 7% YOY increase in projects and rooms, respectively.
Across the country, there are 1,144 projects comprising 141,336 rooms under construction, marking a 9% increase in projects and a 1% increase in rooms YOY.
Projects scheduled to break ground in the next 12 months stand at 2,259 projects totaling 260,968 rooms, reflecting a 10% rise in projects and an 8% increase in rooms YOY. Projects and room counts in the early planning stage was up 9% YOY, touching a new high of 2,662 projects and 300,686 rooms, respectively, the report said.
Among the pipeline projects, a little over half of them are concentrated in the upscale, upper-midscale and midscale chain scales. The upper midscale and midscale segments hit record-high project and room counts. Project counts in the luxury chain scale also touched a new high.
Extended-stay appeared to be a favored segment among developers in the first quarter, with the segment accounting for 37% of the total projects under construction. About 41% of the projects are expected to begin in the next 12 months and 39% of the projects currently in the early planning stage. Around 63% of the projects in the extended-stay segment pipeline are under brands in the middle-tier sector.
Renovation and conversions also posted a significant growth this quarter, touching a record of 2,041 projects and 266,405 rooms. Brand conversions grew 14% by projects YOY and hit a record of 1,235 projects with 114,680 rooms, while announced renovations stand at 806 projects and 151,725 rooms.
The robust pace of conversions and renovations is likely to continue through the year, according to LE analysts.
A total of 114 new hotels with 15,506 rooms opened across the U.S. in the first quarter. More than half of these new openings (72 hotels/8,269 rooms) were located in suburban locations, while 60 hotels/10,036 rooms (or 53%/65%) were located in the top 50 markets.
A modest growth in new openings is expected this year, LE analysts said. Another 547 projects (with 60,483 rooms) are projected to open through the rest of the year, totaling 661 new hotels with 75,989 rooms and representing a 1.3% increase in new hotel supply by the end of the year.
In 2025, 790 additional new hotels with 85,561 rooms are likely to open in the U.S., leading to a 1.5% increase in supply.