The U.S. hotel pipeline in the third quarter increased 7 percent year over year, with 5,704 projects in the development pipeline, led by midscale properties, according to a new Lodging Econometrics report. Dallas again reported the largest hotel construction pipeline among major U.S. markets with a record-high 189 projects in Q3.
While Q3 U.S. hotel pipeline growth mirrored Q2's year-over-year 7 percent increase, the hotel construction pipeline "continues to grow at a moderate pace," according to Lodging Econometrics.
In Q3, U.S. hotels under construction totaled 1,063 projects and more than 140,000 guest rooms, up 8 percent and 4 percent year over year, respectively. Projects scheduled to start construction in the next 12 months also increased, with 2,234 projects and nearly 258,000 rooms in the pipeline, up 8 percent and 9 percent, respectively.
There are 2,407 projects in the early planning stages, up 7 percent year over year and just 27 projects shy of the "all-time high," according to LE. Accompanying those projects, there are nearly 275,000 rooms in the early planning stages, also up 7 percent year over year.
Midscale Leads
According to the Lodging Econometrics, the upper midscale tier represents 38 percent of the total U.S. construction pipeline with 2,149 projects, which total nearly 210,000 rooms. Behind is the upscale sector, which accounts for approximately 24 percent of the total U.S. construction pipeline, with 1,376 projects, which total nearly 171,000 rooms in the pipeline. Together, upper midscale and upscale chains account for 57 percent of rooms in the pipeline.
The extended-stay segment also made its mark in Q3, with 2,176 projects and nearly 224,000 rooms in the U.S. construction pipeline. Extended-stay projects account for 38 percent of total project pipeline, the majority of which are mid-tier brands, according to Lodging Econometrics.
Together, conversion and renovation projects totaled 1,912 in Q3 with nearly 286,000 rooms—a peak total room count at the end of Q3, according to Lodging Econometrics, which expects steady growth to continue through 2025.
Through the end of Q3, 345 new hotels and more than 41,000 rooms have opened in the United States in 2023.
"LE analysts forecast a total of 527 new hotels with 65,905 rooms to open in 2023, representing a 1.2 percent increase in new hotel supply," according to the report. This trend is also expected to continue, according to LE, through 2025.
Dallas Leads, Again
In Q3, the U.S. construction pipeline again was led by Dallas, "an all-time high" of 189 projects and nearly 21,800 rooms, according to LE. Close behind, Atlanta had 140 projects and nearly 17,800 rooms in the pipeline, and Nashville totaled 122 projects and more than 16,000 rooms.
Dallas also represented the largest number of projects scheduled to started in the next 12 months (80), and greatest number of projects in the early planning stages (84).
New York City, however, took the top spot of projects under construction, totaling 46 projects and nearly 8,400 rooms.
Lodging Econometrics did not release U.S. pipeline counts by brand report this quarter, a company spokesperson told BTN.
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