PORTSMOUTH, N.H. — Analysts at Lodging Econometrics (LE) recently reported the five U.S. markets with the largest hotel construction pipelines at the close of 2019 (listed below). The number of hotels under construction is at an all-time high with 1,768 projects and 237,362 rooms.
The five markets with the most projects already in the ground, which collectively accounted for 16 percent of the total number of projects currently under construction across the country, are New York (107 projects/17,268 rooms), Dallas (47 projects/5,894 rooms), Los Angeles (46 projects/7,064 rooms), Atlanta (46 projects/5,643 rooms), and Nashville (37 projects/6,634 rooms).
In the fourth quarter of 2019, Denver had the highest number of new projects announced into the pipeline with 19 projects/2,372 rooms. Following Denver is Atlanta with 18 projects/2,613 rooms, Phoenix with 14 projects/1,907 rooms, Orlando with 14 projects/1,855 rooms, and then Dallas with 13 projects/1,467 rooms.
Reflecting the strong cyclical highs in the pipeline, LE’s forecast for new U.S. hotel openings will continue to rise in 2020 and 2021, with a 2.3 percent and 2.4 percent growth rate, respectively. In 2020, the markets topping the forecast are New York City (66 projects/8,424 rooms), Dallas (34 projects/4,073 rooms), Atlanta (27 projects/3,162 rooms), Houston (27 projects/2,585 rooms), and Nashville (23 projects/3,001 rooms). In the 2021 forecast, Dallas tops the list (39 projects/4,381 rooms), followed by Houston (34 projects/3,313 rooms) and New York City (33 projects/5,680 rooms).
LE analysts also highlighted the importance of monitoring markets with large pipelines as compared to their existing supply of open and operating hotels. These markets are likely to see the fastest supply growth and largest supply-demand variances over the next few years. At the end of 2019, 15 of the top 25 markets had total pipelines in excess of 15 percent of their current census. Nashville tops this list of markets at 34 percent, followed by Los Angeles, Detroit, Miami, Dallas, and New York.
U.S. Markets With the Largest Hotel Pipelines — Year-End 2019
At a cyclical high, Los Angeles has 168 projects/28,501 rooms in its construction pipeline—the largest of any market in the United States. The market also has the third-highest number of hotels already in the ground—46 projects/7,064 rooms—behind New York and Dallas.
Dallas has the second-highest number of hotels in its construction pipeline, with 160 projects/19,787 rooms as well as the second-highest number of projects already in the ground, with 47 projects/5,894 rooms. Dallas also has the second-highest number of expected openings in 2020 (34 projects/4,073 rooms). In 2021, however, the market is expected to have the highest number of newly opened hotels in the country, with 39 projects/4,381 rooms expected to open.
3New York City
While New York City is third in the country for largest hotel construction pipeline (158 projects/25,825 rooms), the market has the greatest number of hotels already in the ground—107 projects/17,268 rooms. New York City has the highest number of projected openings n 2020, with 66 new hotels/8,424 rooms expected to open. In 2021, the market is expected to have the third-highest number of openings, with 33 projects/5,680 rooms.
Atlanta, like Los Angeles, is also at a cyclical high, with 143 projects/19,660 rooms. The market is also fourth in the country for the number of hotels already in the ground, with 46 projects/5,643 rooms. In 2020, Atlanta is forecasted to open 27 projects/3,162 rooms—the third-highest projected openings count in the country.
Houston has 136 hotel projects/14,114 rooms in its pipeline. The market is expected to open 27 projects/2,585 rooms in 2020 and 34 projects/3,313 rooms in 2021, the fourth-highest and second-highest projected opening for those years, respectively.