Conferences and EventsALISU.S. Hotel Construction Pipeline Declines Year Over Year in 2021

U.S. Hotel Construction Pipeline Declines Year Over Year in 2021

PORTSMOUTH, N.H. — At the close of Q4 2021, the total U.S. hotel construction pipeline stood at 4,814 projects totaling 581,953 rooms, down 8 percent by projects and 10 percent by rooms year-over-year (YOY), according to analysts at Lodging Econometrics (LE). While project totals have dipped slightly YOY, the number of projects in the early planning stage continues to rise. In the final quarter of 2021, projects in the early planning stage experienced an 18 percent increase to 2,021 projects and an 11 percent increase in rooms to 239,816 rooms YOY.

The number of projects scheduled to start construction in the next 12 months stood at 1,821 projects/210,890 rooms at the end of the fourth quarter. The number of projects under construction finished the year at 972 projects/131,247 rooms. New project announcements were down in the fourth quarter; however, developers are eager to accelerate projects long-delayed by the COVID-19 pandemic, according to LE analysts. They face some development roadblocks, including escalating inflation and supply chain shortages, that are causing higher prices versus “pre-pandemic” costs for labor and materials. These factors continue to prolong hotel development timelines. LE analysts anticipate these challenges to abate throughout the year and that construction starts will moderately improve.

Nevertheless, the hotel industry has found some assurance in the recent resurgence of travel demand and the steady increase in hotel booking numbers over recent months. Pandemic exhaustion and pent-up demand for getaways have led to a growing number of U.S. travelers becoming more open to travel. In addition to leisure travel, the business sector has a strong desire to travel and meet in person. LE analysts are expecting higher attendance at industry conferences and events after Q1 2022, which will help to raise hotel business demand and positively impact the industry as a whole.

Through year-end 2021, the U.S. opened 823 projects accounting for 105,705 rooms, for a growth rate of 1.9 percent. For 2022, LE is forecasting 783 projects/90,074 rooms to open at a supply growth rate of 1.6 percent. In 2023, continuing at a supply growth rate of 1.6 percent, another 820 projects/93,112 rooms are anticipated to open by year-end.