As seen in the Q2 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics (LE), at the end of the second quarter, there are 6,095 projects with 713,151 rooms in the pipeline. This new all-time high represents a 9% year-over-year (YOY) increase in projects and an 8% YOY increase in rooms compared to Q2 2023 totals.
At the close of the second quarter, there are 1,171 projects comprising 147,611 rooms under construction, marking a 10% increase in projects and a 4% increase in rooms YOY. Projects slated to start construction in the next 12 months total 2,350 projects with 268,378 rooms, reflecting a 5% increase in projects and a 3% increase in rooms YOY. Projects and room counts in the early planning stage increased by 13% and 15% YOY, respectively, ending the quarter at 2,574 projects and 297,162 rooms. LE expects that as interest rates begin to decline, projects scheduled to start in the next 12 months will move to under construction rather quickly.
Extended-stay brands continue to remain popular with developers, accounting for 36% of the total projects under construction, 33% of projects scheduled to begin within the next 12 months, and 34% of projects in the early planning stage. Sixty-four percent of the projects in the extended-stay pipeline are in the middle tier of brands.
LE analysts report that the upper midscale chain scale stands at 2,262 projects/219,547 rooms and has the largest project count of all chain scales in the total construction pipeline at Q2. The second largest is the upscale chain scale, which has 1,417 projects/175,343 rooms. Together, the upscale and upper midscale chain scales comprise 60% of all projects in the total pipeline.
According to LE analysts, 250 new hotels with 29,777 rooms opened in the U.S. during the first and second quarters of 2024. Over half of the hotels that have already opened in 2024 are upscale and upper midscale, at 55 projects/7,032 rooms and 97 projects/9,462 rooms, respectively. These two chain scales are forecasted to have the highest growth rates, through 2026. The upscale chain scale is forecasted to grow its current supply by 2.2% and upper midscale by 2.0% in 2024; both chain scales are expected to grow by 2.3% in 2025; and in 2026, the chain scales should have 3.0% and 2.6% growth, respectively.
In Q1 and Q2, 90 new extended-stay hotels/9,134 rooms opened in the U.S. At year-end 2024, 223 new extended-stay hotels/22,933 rooms are expected to open. In 2025, 304 new extended-stay hotels/31,225 rooms are anticipated to open, and in 2026, LE is forecasting 363 new extended-stay hotels/38,165 rooms to open.
The LE forecast for the remainder of 2024 includes the opening of another 400 projects with 44,451 rooms, totaling 650 new hotels with 74,228 rooms by year-end. The year-end 2024 forecast represents a 35% increase over the total number of hotel openings in 2023, which stood at 480 hotels/60,922 rooms. Looking ahead to 2025, LE analysts anticipate an additional 779 new hotels/87,405 rooms to open. And, announcing for the first time, is LE’s U.S. New Hotel Openings Forecast for 2026, which estimates 928 projects/101,796 rooms to open in the U.S. equating to a 1.8% new supply increase.