LE: U.S. hotel construction pipeline picks up pace to finish out the year

Project and room counts across all stages in the construction pipeline in the U.S. ended the year on a high, revealed the latest report from Lodging Econometrics.  

At the end of Q4 2022, the U.S. construction pipeline stands at 5,465 projects/650,626 rooms, up 14% by projects and 12% rooms YOY, according to the latest Construction Pipeline Trend Report for the U.S. 

All stages of hotel construction in the country recorded positive growth YOY this quarter. At the end of the quarter, there were 1,008 projects/135,492 rooms under construction, up 4% by projects and 3% rooms YOY. Projects expected to start construction in the next 12 months totaled to 2,073 projects/235,222 rooms, up 14% by projects and 12% by rooms YOY. Projects and rooms in the early planning stage jumped 18% and 17% YOY, respectively, reaching all-time high counts of 2,348 projects/279,912 rooms. 

Brand conversion room counts also touched record highs to stand at 1,030 projects/102,162 rooms. At 900 projects/148,105 rooms the renovation pipeline also remained strong, with Q4 2022 witnessing the highest project counts seen since Q1 2019. Together, renovation and conversion activity represented 1,930 projects/250,267 rooms, record-highs by projects and up 53% YOY by projects and 45% by rooms YOY. 

U.S. markets with highest number of projects: 

  • Dallas – 176 projects/20,790 rooms 
  • Atlanta – 145 projects/18,100 rooms 
  • Los Angeles – 122 projects/19,419 rooms 
  • Phoenix – 116 projects/16,229 rooms 
  • Nashville – 106 projects and 14,198 rooms 

Franchise companies with most project and room counts:  

  • Marriott International – 1,490 projects/180,113 rooms 
  • Hilton Worldwide – 1,378 projects/154,790 rooms 
  • IHG – 789 projects/78,951 rooms 

Hotel brands with highest number of projects: 

  • Home2 Suites by Hilton – 521 projects/53,735 rooms 
  • Marriott’s TownePlace Suites – 320 projects/29,802 rooms 
  • IHG’s Holiday Inn Express – 293 projects/27,817 rooms 

The outlook for the lodging industry in 2023 will be strong, the report said, as it continues to recover from lows seen in the last two years. Despite the economic challenges faced by the hotel industry, travel and hotel bookings surged in 2022. The new construction pipeline continues its growth at a moderate pace with new project announcements and construction-starts soaring by 35% YOY and 36% YOY respectively.  

A total of 464 new hotels, accounting for 54,620 rooms, for a growth rate of 1% opened in the U.S. through last year. This year, new hotel openings are projected to increase with 607 projects/72,665 rooms, representing a 1.3% supply increase; and in 2024, 722 projects/82,813 rooms are expected to open, for a 1.5% supply increase.