U.S. Hotel Construction Pipeline Continues Growth in Q1 2019

U.S. hotel construction pipeline - state of hotel real estate

PORTSMOUTH, N.H.—At the end of the first quarter of 2019, the total U.S. hotel construction pipeline continued to expand with 5,647 projects totaling 687,941 rooms—up a strong 7 percent by projects and 8 percent by rooms year-over-year (YOY), according to analysts at Lodging Econometrics (LE). These pipeline totals are just 236 projects, or 4 percent, shy of the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008. LE analysts expect that record to be pierced later in the year, as conversions and renovations are already at record levels.

Projects currently under construction stand at 1,709 projects/227,924 rooms with projects scheduled to start construction in the next 12 months at 2,429 projects/281,395 rooms. U.S. hotel construction projects in the early planning stage stand at 1,509 projects/178,622 rooms.

The upscale, upper-midscale, and midscale segments all reached record-highs for both projects and rooms. Sixty-six percent of projects in the total pipeline are concentrated in two chain scales: upscale and upper midscale.

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Annualized construction starts are at the highest level since 2008. In 2019, LE forecasts a 2.2 percent supply growth rate with 1,038 new hotels/118,385 rooms expected to open. For 2020, LE anticipates 1,174 new hotel openings and 128,598 rooms.

Hotel operations had a good quarter, but mostly as a result of expense improvements. Only seven of the top 25 markets showed occupancy increases quarter-over-quarter. Only 11 markets had RevPAR increases. Overall, U.S. demand growth was up 2.4 percent while supply was up 2 percent.

 


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