Hotel Development Trends & Projections
Project and Room Counts in All Stages of the U.S. Hotel Construction Pipeline Increase Year-Over-Year at Q4 2022 Close
In the most recent Construction Pipeline Trend Report for the United States (U.S.) from Lodging Econometrics (LE), at the close of 2022’s fourth quarter, the U.S. construction pipeline stands at 5,465 projects/650,626 rooms, up 14% by projects and 12% rooms Year-Over-Year (YOY).
In Q4, all stages of hotel construction in the U.S. experienced positive YOY growth. At the close of the quarter, there are 1,008 projects/135,492 rooms under construction, up 4% by projects and 3% rooms YOY. Projects scheduled to start construction in the next 12 months stand at 2,073 projects/235,222 rooms, up 14% by projects and 12% by rooms YOY. Projects and rooms in the early planning stage increased 18% and 17% YOY, respectively, reaching all-time high counts of 2,348 projects/279,912 rooms.
The 2023 outlook for the lodging industry looks strong, as it continues to recover from the lows experienced throughout the past two years. Although the U.S. and the hotel industry continue to face some economic challenges, travel and hotel bookings increased substantially during 2022 and the new construction pipeline in the U.S. continues to grow at a moderate pace with new project announcements and construction-starts increasing 35% YOY and 36% YOY, respectively. Hotel owners, investors, developers, and management groups see much opportunity in the year ahead.
At the end of the fourth quarter, brand conversion room counts reached record highs of 1,030 projects/102,162 rooms. The renovation pipeline also remained strong in Q4, reaching the highest project counts seen since Q1 2019, standing at 900 projects/148,105 rooms. Combined, renovation and conversion activity accounts for 1,930 projects/250,267 rooms, record-highs by projects and up 53% YOY by projects and 45% by rooms YOY.
The U.S. Markets with the greatest number of projects in the construction pipeline, at the end of the fourth quarter, are Dallas with 176 projects/20,790 rooms. Following are Atlanta with 145 projects/18,100 rooms, Los Angeles with 122 projects/19,419 rooms, Phoenix with 116 projects/16,229 rooms, and Nashville with 106 projects and 14,198 rooms.
Franchise companies topping the pipeline with the greatest project and rooms counts at Q4 are Marriott International with 1,490 projects/180,113 rooms, Hilton Worldwide with 1,378 projects/154,790 rooms, and InterContinental Hotels Group (IHG) with 789 projects/78,951 rooms.
The brands with the largest number of projects in the pipeline at Q4 close are Home2 Suites by Hilton, with 521 projects/53,735 rooms; Marriott’s TownePlace Suites with 320 projects/29,802 rooms; and InterContinental Hotels Group’s (IHG) Holiday Inn Express with 293 projects/27,817 rooms.
Throughout 2022, the U.S. opened 464 new hotels, accounting for 54,620 rooms, for a growth rate of 1.0%. LE analysts expect new hotel openings to increase in 2023 with 607 projects/72,665 rooms forecasted to open, representing a 1.3% supply increase; and in 2024, 722 projects/82,813 rooms are expected to open, for a 1.5% supply increase.
Marriott, Hilton, and IHG Close Q4 2022 with Largest Projects Counts in Every Stage of the U.S. Construction Pipeline
As reported in the fourth quarter United States Construction Pipeline Trend Report from Lodging Econometrics (LE) for 2022, the franchise companies with the largest construction pipelines at the end of Q4 are led by Marriott International (Marriott) with 1,490 projects/180,113 rooms. Following Marriott is Hilton Worldwide (Hilton) with 1,378 projects/154,790 rooms and InterContinental Hotels Group (IHG) with 789 projects/78,951 rooms. Combined, these three companies account for 67% of the projects and 64% of the rooms in the total pipeline.
At the close of the quarter, these top franchise companies also have the greatest number of projects and rooms in each stage of the U.S. construction pipeline. Marriott closed Q4 2022 with the largest project count in the under construction stage with 266 projects/36,112 rooms, followed by Hilton with 252 projects/31,240 rooms, and IHG with 141 projects/15,935 rooms currently under construction.
At the close of the fourth quarter, Marriott also leads with the most projects scheduled to start construction in the next 12 months with a record project count of 825 projects/97,176 rooms, followed by IHG with a project count of 460 projects/44,255 rooms, and Hilton with 303 projects/35,695 rooms.
Hilton closed Q4 with record-high project and room counts in the early planning stage, totaling 823 projects/87,855 rooms. Marriott currently has 399 projects/46,825 rooms in early planning, and IHG closed the fourth quarter with 188 projects/18,761 rooms in the early planning stage.
The brands of each of these companies with the largest number of projects in the pipeline at Q4 are Hilton’s Home2 Suites with record high project and room counts of 521 projects/53,735 rooms; TownePlace Suites and Marriott’s Residence Inn brands also hit record project and room counts at Q4 with 320 projects/29,802 rooms and 258 projects/31,229 rooms, respectively. IHG’s Holiday Inn Express brand closed the quarter with 293 projects/27,817 rooms in the pipeline. Other prominent brands in the pipeline for these franchise companies are the Hampton by Hilton brands with 280 projects/28,670 rooms; Marriott’s Fairfield Inn with 240 projects/21,887 rooms; and IHG’s Avid Hotel brand with 133 projects/11,195 rooms.
For all of 2022, Marriott opened 131 new hotels/16,643 rooms. Hilton opened 118 new hotels/13,916 rooms, and IHG opened 57 new hotels/6,246 rooms.
LE analysts forecast Marriott will open the greatest number of new hotels in 2023 with 156 projects/19,755 rooms for a growth rate of 2.2%. Next is Hilton with 146 projects/17,290 rooms for a growth rate of 2.2%, followed by IHG with 90 projects/10,540 rooms for a growth rate of 2.5%. In 2024, LE forecasts that Marriott will open 193 projects/23,024 rooms. Hilton is expected to open 164 projects/18,639 rooms, and IHG is expected to open 124 projects/11,713 rooms.
Dallas is Tops with the Largest Hotel Construction Pipeline in the U.S. and Record-High Project Counts at the Close of Q4 2022
According to the fourth quarter United States Construction Pipeline Trend Report from Lodging Econometrics (LE), the U.S. market with the largest hotel construction pipeline by projects is Dallas with a record high count of 176 projects, accounting for 20,790 rooms. Following Dallas is Atlanta with 145 projects/18,100 rooms, Los Angeles with 122 projects/19,419 rooms, Phoenix with 116 projects/16,229 rooms, and Nashville with 106 projects/14,198 rooms.
U.S. markets with the most projects currently under construction are New York, with 61 projects/9,976 rooms, and Phoenix, with 28 projects/5,522 rooms. Following New York and Phoenix is Atlanta, with 27 projects/4,253 rooms, Dallas, with 23 projects/3,435 rooms, and California’s Inland Empire region, with 21 projects/2,120 rooms.
At the Q4 close, Dallas has the most projects scheduled to start in the next 12 months with 68 projects/7,711 rooms, followed by Atlanta with 63 projects/7,520 rooms, Phoenix with 47 projects/5,492 rooms, Nashville with 45 projects/5,199 rooms, and then Los Angeles with 42 projects/6,436 rooms.
Dallas also has the largest project count for hotel projects in the early planning stage, standing at 85 projects/9,644 rooms at the Q4 close. Following Dallas is Los Angeles with 61 projects/10,033 rooms, then Atlanta with 55 projects/6,327 rooms, the Inland Empire region with 48 projects/4,993 rooms, and Orlando with 45 projects/8,127 rooms.
Throughout 2022, the markets with the greatest number of new openings are New York with 29 projects/4,223 rooms, Austin with 18 projects/2,233 rooms, Nashville with 15 projects/2,354 rooms, Atlanta with 13 projects/1,746 rooms, and Washington, DC with 11 projects/2,012 rooms.
LE analysts forecast the New York market will have the most new hotel openings in 2023 with 46 new hotels /7,795 rooms, for a 6.4% growth rate. In 2024, Atlanta is forecast to open the most new hotels, with 26 projects/3,881 rooms, for a 3.4% growth rate.