Hotel Development Trends & Projections
U.S. Hotel Development Kicks off Q1 2024 with Growth and Record-Highs
As seen in the Q1 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics (LE), at the end of the first quarter, there are 6,065 projects with 702,990 rooms in the pipeline. This new all-time high represents a 9% year-over-year (YOY) increase in projects and a 7% YOY increase in rooms compared to last year.
The details can be seen directly within the stages of the pipeline, which all saw YOY growth in Q1. Presently, there are 1,144 projects comprising 141,336 rooms under construction, marking a 9% increase in projects and a 1% increase in rooms YOY. Projects slated to start construction in the next 12 months total 2,259 projects with 260,968 rooms, reflecting a 10% rise in projects and an 8% increase in rooms YOY. Notably, both projects and room counts in the early planning stage increased by 9% YOY, reaching record-high figures of 2,662 projects and 300,686 rooms, respectively. Of all the projects in the pipeline, a little over half of them are concentrated within the upscale, upper-midscale, and midscale chain scales. In Q1, the upper midscale and midscale segments hit record-high project and room counts. The luxury chain scale also reached a record-high project total in Q1.
The latest data from LE also highlights the dominance of extended-stay brands in the pipeline at Q1, a segment that developers have increasingly favored in recent years. These brands now account for 37% of the total projects under construction, 41% of projects scheduled to begin within the next 12 months, and 39% of projects in the early planning stage. Sixty-three percent of the extended stay projects in the pipeline are branded with brands within the middle tier extended stay segment.
Renovation and brand conversion activities in the U.S. have also seen significant growth, reaching record-high combined totals of 2,041 projects and 266,405 rooms. Brand conversions, in particular, have hit a new record-high of 1,235 projects with 114,680 rooms, growing 14% by projects YOY, while announced renovations at Q1 stand at 806 projects and 151,725 rooms. LE analysts anticipate this robust conversion and renovation activity to continue throughout 2024.
In terms of new hotel openings, the first quarter saw the opening of 114 new hotels with 15,506 rooms in the U.S. Over half of these opens, 72 hotels/8,269 rooms, were in suburban locations, and 60 hotels/10,036 rooms (or 53%/65%) of newly opened hotels were located within the top 50 markets. With a record number of projects in early planning and an increasing number of projects scheduled to start in the next 12 months, LE analysts project modest growth in new hotel openings through 2024. The LE forecast for the remainder of 2024 includes the opening of another 547 projects with 60,483 rooms, totaling 661 new hotels with 75,989 rooms and representing a 1.3% increase in new hotel supply by year-end. Looking ahead to 2025, LE analysts anticipate an additional 790 new hotels with 85,561 rooms to open in the U.S., resulting in a 1.5% supply increase.
Dallas’ Hotel Construction Pipeline Largest at Q1; Atlanta Hits Its All-Time High
The recent U.S. Construction Pipeline Trend Report from Lodging Econometrics (LE) reports that, at the close of the first quarter, the top five markets with the largest hotel construction pipelines are led by Dallas with 185 projects/21,882 rooms, slightly below record-highs recorded at the end of Q4 2023. Next is Atlanta, with an all-time high of 153 projects with 17,929 rooms, then Nashville with 127 projects/16,199 rooms. Phoenix follows with 123 projects/16,198 rooms, and the Inland Empire with a new record-high 121 projects/12,324 rooms.
U.S. markets with the greatest number of projects already under construction at the Q1 close are New York with 47 projects/7,655 rooms, Dallas with 25 projects/3,059 rooms, and Nashville with 22 projects/2,828 rooms. Atlanta has 21 projects/2,588 rooms and the Inland Empire currently has 20 projects/2,181 rooms under construction. Dallas has the most projects scheduled to start in the next 12 months, with 77 projects/9,269 rooms. Following Dallas are Atlanta with 56 projects/6,656 rooms; Phoenix, with 56 projects/6,853 rooms; the Inland Empire with 54 projects/5,369 rooms; and Nashville, with 49 projects/6,600 rooms. Nationally, early planning project and room counts hit a new all-time high with 2,662 projects/300,686 rooms. At the end of Q1, Dallas leads the U.S. with the largest number of projects in early planning at 83 projects/9,554 rooms. Atlanta follows, with 76 projects/8,685 rooms. Next is Nashville with 56 projects/6,771 rooms; Austin with 51 projects/5,608 rooms; and Orlando with 49 projects/11,442 rooms.
In the top 25 U.S. markets, a total of 105 new pipeline projects, accounting for 10,219 rooms, were announced during 2024’s first quarter. The leading markets for new project announcements (NPAs) include New York with 12 projects/1,660 rooms, Orlando with 11 projects/2,706 rooms, Atlanta with 10 projects/1,139 rooms, Denver with 8 projects/2,013 rooms, and the Inland Empire with 8 projects/886 rooms.
Renovation and brand conversion activity continued to increase throughout the United States at Q1. During the first quarter, 2,041 projects/266,405 rooms were in the renovation/conversion pipeline. At Q1, Los Angeles has the largest count of combined renovation and conversion projects with 31 projects/4,857 rooms. New York, Atlanta, and Chicago follow, each with 30 projects and accounting for 8,020 rooms, 3,488 rooms, and 8,128 rooms, respectively. Phoenix has 28 projects/5,100 rooms under renovation and conversion at the close of the first quarter.
In the first quarter, 114 new hotels/15,506 rooms opened in the U.S., of which 60 hotels/10,036 rooms opened in the top 50 markets. LE is forecasting these same 50 markets to open another 255 projects/30,502 rooms over the next three quarters, for a total of 315 projects/40,538 rooms in 2024. In 2024, New York City tops the new hotel openings chart with 26 new hotels expected to open with 2,910 rooms, followed by Dallas with 16 new hotels/2,013 rooms, Inland Empire with 15 new hotels/1,559 rooms, Atlanta with 14 new hotels/2,732 rooms, and Orlando with 13 new hotels/2,364 rooms. In the 2025 forecast, LE analysts expect Atlanta to lead new hotel openings with 20 new hotels/2,141 rooms, followed by Dallas with 20 new hotels/2,092 rooms, then Houston with 19 new hotels/1,962 rooms. Phoenix and New York round out the top markets with 18 new hotels/2,912 rooms and 17 hotels/2,906 rooms, respectively.
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