— U.S. Winter 2020/21 Edition —

LE’s New Business Opportunities

Your quarterly pulse on hotel development trends and LE news

The U.S. Hotel Construction Pipeline Stands at 5,216 projects/650,222 rooms at year-end 2020

According to Lodging Econometrics’ (LE’s) Construction Pipeline Trend Report for the United States, the total U.S. construction pipeline stands at 5,216 projects/650,222 rooms. These are year-end 2020 results, and are down only incrementally, as the United States grappled with the ongoing coronavirus pandemic, an election, civil unrest, and the large and rapid partisan shift taking place. However, the announcement of various vaccine developments and distribution was undeniably good news for the general public, businesses, hotel development and the lodging industry as a whole, especially going forward. The industry has found optimism in the fact that as the vaccine rolls out travel demand will increase rather quickly, resulting in increased confidence in hotel development activity.

At the end of Q4 ’20, projects currently under construction stand at 1,487 projects/199,700 rooms. Of the 1,487 projects under construction, 24% of these projects in the pipeline belong to extended-stay brands, a segment of the industry that developers have become increasingly interested in over the last few years. Projects under construction continue to move towards opening. Through year-end 2020, the U.S. opened 833 projects accounting for 97,203 rooms, bringing the U.S. supply of open & operating hotels to 58,569 hotels/5,557,119 rooms. Additionally, of the 833 projects opened in 2020, an impressive 29% of those projects belong to extended-stay brands.

LE is forecasting another 929 projects/107,407 rooms to open by the end of 2021. If all of these projects come to fruition it will represent a 1.9% increase in new hotel supply. For 2022, LE is forecasting 1,031 projects/116,749 rooms to open.

Projects scheduled to start construction in the next 12 months total 2,015 projects/234,703 rooms, down 12% by projects and 11% by rooms YOY. Projects in the early planning stage stand at 1,714 projects/215,819 rooms, a cyclical high in the number of rooms, and up slightly YOY.

It is also worth noting that renovations and brand conversions are becoming more prevalent. At the end of Q4 ‘20, there were a total 1,308 projects/210,124 rooms under renovation or conversion in the U.S. The number of projects and rooms has grown consistently over the last three quarters of 2020.

Three Franchise Companies Account for 3,513 Projects/419,466 Rooms in the U.S. Hotel Construction Pipeline

In the recently released Q4’20 United States Construction Pipeline Trend Report from Lodging Econometrics (LE), the franchise companies with the largest U.S. construction pipelines at year-end 2020 are Marriott International with 1,397 projects/184,775 rooms, followed by Hilton Worldwide with 1,290 projects/150,294 rooms, and InterContinental Hotels Group (IHG) with 826 projects/84,397 rooms. These three companies combined account for 67% of the projects and 65% of the rooms in the total U.S. construction pipeline.

At the end of Q4’20, over 50% of Hilton’s projects in the pipeline are in the early planning project stage, a record-high in this stage for the company, with 659 projects/71,962 rooms. Most of Marriott’s and IHG’s projects are currently in the scheduled to start in the next 12 months stage, with 44% and 65% in this stage, respectively.

The brands with the largest U.S. pipelines currently are Hilton’s Home2 Suites with 385 projects/40,265 rooms and IHG’s Holiday Inn Express with 326 projects/31,258 rooms. Hampton by Hilton follows with 281 projects/29,434 rooms, then Tru by Hilton with 261 projects/25,027, and Marriott’s Fairfield Inn with 277 projects/26,922 rooms.

Other notable brands in the pipeline include Marriott’s TownePlace Suites with 203 projects/20,241 rooms and Residence Inn with 192 projects/23,815 rooms, IHG’s Avid Hotel with 175 projects/15,675 rooms, and then Marriott’s SpringHill Suites with 164 projects/18,585 rooms.

Through year-end 2020, Marriott, Hilton, and IHG branded hotels represented 594 new hotel openings with 67,368 rooms. 244 of the hotels were Hilton brands, 230 were Marriott brands, and another 120 were IHG brands. LE is expecting these top franchise companies to open another 617 hotels by the end of 2021. For 2022, these same companies are forecast to open 671 new hotels.

The New York City Market is Back on Top and Leads the U.S. Construction Pipeline

In the recent U.S. Construction Pipeline Trend Report released by Lodging Econometrics (LE), at the close the fourth quarter of 2020 and after more than 6 quarters since leading all U.S. markets in the number of pipeline projects, New York City has regained top billing again with 150 projects/25,640 rooms. Other U.S. markets that follow are Los Angeles with 148 projects/24,808 rooms; Dallas with 147 projects/17,756 rooms; Atlanta with 140 projects/19,863 rooms, recording a record-high number of rooms; and Orlando with 112 projects/19,764 rooms, a record-high pipeline project count for the market.

New York City has the greatest number of projects under construction with 108 projects/19,439 rooms. Following New York City with the highest number of projects under construction is Atlanta with 46 projects/6,728 rooms, and then Los Angeles with 40 projects/7,131 rooms; Dallas with 39 projects/4,656 rooms; and Austin with 33 projects/4,850 rooms.

Despite the impact COVID-19 has had on hotel development, there are four markets in the U.S. that announced more than 10 new construction projects in Q4 ’20. Those markets include Miami with 18 projects accounting for 2,756 rooms, Orlando with 18 projects/4,806 rooms, New York with 17 projects/2,700 rooms, and Atlanta with 11 projects/1,843 rooms.

LE has also seen an increase in announced renovation and brand conversion activity throughout the last few quarters. At year-end 2020, there were 1,308 projects/210,124 rooms in the U.S. undergoing a renovation or conversion. Of the 1,308 renovation and conversion projects, 625 of those are in the top 50 markets. There are nine markets in the U.S. that currently have more than 20 renovation and conversion projects underway. That is led by Los Angeles with 28 projects, followed by Phoenix, Washington DC, Houston, Atlanta, Dallas, Chicago, New York, and Norfolk.

The top 50 markets saw 399 hotels/52,581 rooms open in 2020. LE is forecasting these same 50 markets to open another 509 projects/66,475 rooms in 2021, and 575 projects/71,025 rooms in 2022.

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