U.S. Hotel construction pipeline continues growth - Insights
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U.S. Hotel construction pipeline continues growth

U.S. Hotel construction pipeline continues growth
U.S. Hotel construction pipeline continues growth

Analysts at Lodging Econometrics (LE) reported for the second quarter of 2019, the total U.S. construction pipeline climbed to 5,653 projects/693,207 rooms, up 6% by projects and 9% by rooms year-over-year (YOY). Pipeline totals are just 230 projects shy of the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008.

Projects currently under construction stand at 1,727 projects/233,600 rooms with projects scheduled to start construction in the next 12 months at 2,552 projects/295,989 rooms. Both are at the highest levels since early 2008. Projects in the early planning stage stand at 1,374 projects/163,618 rooms.

In the first half of 2019, the industry opened 456 new hotels with 53,427 rooms. An additional 599 projects/66,300 rooms are expected to open by year-end. In 2020, the LE forecasts for new hotel openings continue to rise with 1,161 new hotels/129,531 rooms scheduled to open. In 2021, with a growth rate of 2.5%, 1,206 new hotels with 139,793 rooms are likely to open as a result of the current robust pipeline. Should all these hotels come to fruition, 2021 will register the highest count for new hotel openings since 2009.

Trendline analysis suggests that the pipeline is in a topping out formation as new project announcements into the pipeline in the second quarter are at 359 projects/ 44,895 rooms, their lowest count since the fourth quarter of 2014. Brand to brand conversions have also declined over the last year and are at the lowest level since the end of 2016.

Although government spending and consumer sentiment and spending remain strong, these declines can be attributed to business spending declines which have turned negative for the first time since early 2016. Declines are due primarily to the uncertainty caused by trade and tariff problems and the slowing global economy.

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