Lodging Econometrics—The U.S. Hotel Construction Pipeline

NATIONAL REPORT—According to the year-end U.S.Construction Pipeline Trend Report from Lodging Econometrics (LE), the pipeline continued its upward growth trend in 2019 and stands at 5,530 projects/669,456 rooms, up a strong 7% by projects and rooms year-over-year (YOY). However, pipeline totals continue to trail the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008.

Projects in early planning continue to soar reaching an all-time high at 1,723 projects/199,326 rooms, up 14% by projects YOY. Projects scheduled to start construction in the next 12 months stand at 2,153 projects/255,083 rooms. Projects currently under construction are at 1,654 projects/215,047 rooms, the highest counts since early 2008.

Forecast for 2019 and 2020

In 2018, the U.S. had 947 new hotels/112,050 rooms open, a 2% growth in new supply, bringing the total U.S. census to 56,909 hotels/5,381,090 rooms. The LE forecast for new hotel openings in 2019 anticipates a 2.2% supply growth rate with 1,022 new hotels/116,357 rooms expected to open. The 2020 forecast for new hotel openings stands at 1,136 hotels/125,559 rooms and a supply growth rate of 2.3%. The pace for new hotel openings has slowed slightly because of construction delays largely caused by shortages in skilled labor.

Almost half of the hotels expected to open in 2019 and 2020 are upper midscale, at 463 projects/46,114 rooms and 506 projects/49,966, or 45% of the total pipeline. This is followed by upscale, at 299 projects/37,693 rooms and 326 projects/37,693 rooms. These two chain scales represent 74% of the 1,022 projects anticipated to open in 2019 and 2020.

The markets with the highest supply growth rate in 2019 are: New York; San Jose, CA; Nashville, TN; Charlotte, NC; Indianapolis; Austin, TX; Memphis, TN; Fort Worth, TX; Boston; and Miami.

In 2020, New York which has continuously been the market with the most projects in the pipeline and forecasted openings for any given year, will begin to taper off. It will still open the most hotels with 38 projects/6,091 rooms, however, that will only increase the city’s existing supply by 4.8%. Other markets such as Austin, TX; Charlotte, NC; Nashville, TN; and Kansas City, MO are all expected to growth their existing supply by over 5%.

All of the top markets with the highest rate of growth for 2019 and 2020 are well above the national growth rate of 2.2%.

For more information on the state of the construction pipeline or the forecast for what’s ahead in the United States or any other region, country or market worldwide, please contact Lodging Econometrics at +1 603.427.9542 or email: [email protected].

 JP Ford, SVP, director of business development, Lodging Econometrics

Bruce Ford, SVP, director of global business development, Lodging Econometrics

Tom O’Gorman, VP of sales, Lodging Econometrics