Dive Brief:
- The Dallas market leads the U.S. hotel construction pipeline with an all-time high of 189 projects consisting of close to 22,000 rooms, followed by Atlanta, Nashville, Phoenix and California’s Inland Empire area, according to a report from Lodging Econometrics, a provider of hotel data.
- Dallas takes the top spot nationally for most projects under construction, projects scheduled to start in the next 12 months and projects in early planning, while Orlando, Florida, saw the highest number of projects announced in the pipeline, according to the report. New York City continued to have the greatest number of projects under construction, with 46 projects and 8,386 rooms.
- Upper-midscale and extended stay projects dominate the U.S. construction pipeline, comprising 38% of all projects, with analysts forecasting continued growth in new hotel openings in the coming years, according to Lodging Econometrics.
Dive Insight:
The total U.S. hotel construction pipeline jumped to 5,704 projects at the end of the 2023’s third quarter, a 7% increase year-over-year, according to the report.
That’s largely because a recovery in the hospitality industry coupled with an increase in consumer confidence have led hotel companies to prime their construction pipelines. For instance, the Dodge Construction Network recently pegged the latest jump in commercial construction starts to gains in parking structures and hotels.
Some of the sector’s groundbreakings and openings in recent months include:
Upper-midscale chains leads the project count, followed by upscale chains. Extended stay projects account for a significant portion of the pipeline, with middle-tier extended stay brands also playing a substantial role, according to the report. That includes activity from Marriott, Hilton, Best Western, Hyatt and IHG.
Renovation and conversion projects remain strong, with a peak in rooms under renovation or conversion at the end of the third quarter. Lodging Econometrics expects a steady increase in new hotel openings, with a 1.4% and 1.5% growth rate in new hotel supply for 2024 and 2025, according to the report.