In the recently released Q2 2022 United States Construction Pipeline Trend Report from Lodging Econometrics (LE), at the close of the second quarter, the top five markets with the largest hotel construction pipelines are Dallas with a record-high count of 173 projects accounting for 20,707 rooms, Atlanta with 140 projects/18,131 rooms, Los Angeles with 124 projects/20,365 rooms, New York with 113 projects/19,238 rooms, and Phoenix with 108 projects/14,964 rooms.
According to LE analysts, many major markets and popular U.S. tourist destinations have seen a significant increase in demand throughout the first half of the year. Driven by leisure, group, and international travel, these markets are reporting the highest occupancy rates since the pandemic began in early 2020. Encouraged by 2022’s upward trend in hotel performance, owners, management groups, developers, and investors are moving forward with development plans as evidenced by increasing counts at every stage of construction.
The five top markets with the most projects currently under construction are New York City with 78 projects/13,063 rooms, Atlanta with 25 projects/3,905 rooms, Dallas with 25 projects/3,725 rooms, Phoenix with 23 projects/4,955 rooms, and Los Angeles with 22 projects/3,606 rooms. Collectively, these five markets account for 22 percent of the total number of rooms currently under construction in the United States. At Q2 2022, Atlanta has the most projects scheduled to start in the next 12 months, with 62 projects/8,020 rooms. Behind Atlanta is Dallas with 55 projects/6,465 rooms, Phoenix with 49 projects/5,968 rooms, Houston with 45 projects/4,619 rooms, and Los Angeles with 43 projects/6,715 rooms. Dallas has the most projects in early planning with 93 projects/10,517 rooms. Los Angeles follows with 59 projects/10,044 rooms. Next is Atlanta with 53 projects/6,206 rooms; Orlando with 44 projects/7,640 rooms; and Washington, D.C. with 40 projects/5,659 rooms.
In the second quarter of 2022, Dallas recorded the highest count of new projects announced into the pipeline with 16 projects/1,654 rooms. Atlanta followed with 11 projects/1,206 rooms, then the Inland Empire, California market with 11 projects/1,113 rooms, Houston with 9 projects/929 rooms, and Charlotte with 9 projects/916 rooms. LE recorded a combined renovation and conversion pipeline total of 1,889 projects with 237,420 rooms for the United States. The markets with the largest combined number of renovations and conversions are Houston with 42 projects/4,666 rooms, Atlanta with 39 projects/5,246 rooms, Chicago with 34 projects/4,908 rooms, Dallas with 30 projects/3,785 rooms, and San Diego with 28 projects/4,753 rooms.
Twenty-six percent of the new hotels forecast to open between now and the 2022 year-end are concentrated within seven markets. These markets are New York, Austin, Atlanta, Los Angeles, Nashville, Detroit, and Inland Empire. In Q2, the top 25 markets in the United States are forecast to open 46 percent of the rooms expected to open by year-end.
Of the top 50 markets in the United States, the New York City market is forecast to open 58 projects/8,329 rooms by year-end, followed by Austin with 25 projects/3,291 rooms, Atlanta with 22 projects/2,598 rooms, Los Angeles with 18 projects/3,191 rooms, and Nashville with 17 projects/2,630 rooms.
The top 50 markets saw 151 projects/18,966 rooms open in the first half of 2022. LE is forecasting these same 50 markets to open another 252 projects/33,948 rooms in the second half of the year, for a total of 403 projects/52,914 rooms by year-end 2022. In 2023, 366 projects accounting for 46,176 rooms are forecast to open within the top 50 markets, for a 1.7 percent growth rate, and in 2024, LE analysts forecast 402 new hotel projects, accounting for 47,065 rooms to open for a 1.7 percent growth rate.
