The U.S. hotel construction pipeline as of Sept. 30 declined 8 percent year over year to 4,837 projects, according to a new Lodging Econometrics report. Rooms under construction declined 10 percent to about 592,000. Factors influencing developer decisions include the prolonged effects of the pandemic, above-average inflation, rising interest rates, and material shortages and price increases, according to the report.
Further, third-quarter projects scheduled to start construction in the next 12 months are down 14 percent year over year, and 15 percent by room count. Projects under construction also were down in the quarter, largely due to projects that have completed construction and have opened.
Still, developers have a more positive long-term view with 1,978 projects with nearly 240,000 rooms in the early planning stages in the third quarter, up 27 percent and 25 percent year-over-year, respectively.
Year to date through Sept. 30, 665 new hotels with 85,306 rooms opened in the United States, with another 221 projects with 23,026 rooms anticipated to open by the end of the year.
Hotel Chain, Brand Construction
Marriott International leads hotel companies with the most new construction projects at 1,286 with 166,174 rooms. Hilton is next with 1,223 projects with 139,742 rooms, followed by IHG Hotels & Resorts with 769 projects with 77,558 rooms. These three companies combined comprise 68 percent of the total construction pipeline projects, according to Lodging Econometrics.
The brands leading with the most project counts include Home2 Suites by Hilton, followed by IHG's Holiday Inn Express and Marriott's Fairfield Inn. These three brands account for 20 percent of the projects in the total construction pipeline. Additional brands with significant projects in the works are Hilton's Hampton and Tru, Marriott's TownePlace Suites and Residence Inn, and IHG's Avid and Staybridge Suites.
Marriott opened 60 new hotels with 7,882 rooms during the third quarter, accounting for 30 percent of the new hotel rooms that opened in the United States. Hilton followed with 45 new hotels with 4,923 rooms, accounting for 19 percent of new U.S. rooms.
Construction by Destination
Dallas led all locations for the third quarter with the most total hotel construction projects at 147 with 17,711 rooms, followed closely by Atlanta with 139 projects with 18,659 rooms. Los Angeles, New York and Houston rounded out the top five. In total, these five account for 13 percent of the projects and 15 percent of the rooms in the total U.S. pipeline.
The top 25 markets account for 33 percent of all projects and 37 percent of all rooms in the U.S. hotel construction pipeline. New York, Atlanta, Dallas, Los Angeles and Austin have the greatest number of projects already in the ground. Atlanta has the largest number of projects projected to start construction in the next 12 months.
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