U.S. Hotel Construction Pipeline Hits All-Time Record High Project Counts at Q4 Close

According to the 2023 year-end U.S. Construction Pipeline Trend Report from Lodging Econometrics (LE), the pipeline stands at 5,964 projects/693,963 rooms. The pipeline hit record project counts at Q4, with the addition of 260 projects and 21,287 rooms over last quarter, and a 9% increase by projects and a 7% increase by rooms year-over-year (YOY). The previous project count high was Q2 2008 with 5,883 projects.

At the close of 2023’s fourth quarter, there are 1,118 projects/141,768 rooms under construction, up 11% by projects and 5% by rooms YOY. Projects scheduled to start within the next 12 months stand at 2,259 projects/261,582 rooms, up 9% by projects and 11% by rooms YOY. Projects and rooms in the early planning stage hit all-time highs at Q4, standing at 2,587 projects/290,613 rooms, and up 9% by projects and 4% by rooms YOY.

Notably, the number of combined hotel renovations and brand conversion projects in the U.S. continued its upward growth trend through the end of 2023, closing the year with record project and room counts of 2,028 projects/303,330 rooms.

The upper midscale segment has the highest project count of all chain scales in the total U.S. construction pipeline at the Q4 close, reaching an all-time high of 2,245 projects/218,112 rooms. The second largest is the upscale category, which has 1,445 projects/177,999 rooms. Together, these two chain scales comprise 62% of all projects in the country’s total pipeline at the Q4 close.

The recent Federal Reserve signaling of three 25-basis-point interest rate cuts in 2024 and additional cuts in 2025 sends a positive but cautious outlook for U.S. hotel development in the year ahead. With the anticipation of multiple rate cuts in 2024, hotel development seems poised for constructive growth well beyond 2024. The primary reason lies in less expensive borrowing costs, providing long-awaited relief on interest rates. This is expected to have a favorable impact not only on new construction but acquisitions, renovations, and conversions as well. Despite the positive outlook, lenders continue to be vigilant, and many investors continue with a “wait and see” attitude; holding out hope for potentially deeper rate cuts. We expect this cautious, yet optimistic approach will continue through 2024, however, we expect to see investors re-engaging, which, as we can tell by the pipeline numbers and record-high project counts, has already begun. We expect lending volume to increase slowly in the first half of 2024 and then gradually pick up the pace in the second half of the year.

In 2023, the U.S. had 474 new hotels/60,436 rooms open, a 1.1% growth rate in new supply, bringing the total U.S. census to 59,636 hotels/5,655,356 rooms. In 2024, LE analysts expect the existing supply of hotels in the U.S. to increase 1.4% with the opening of 677 new hotels and 79,518 rooms. The LE forecast for new hotel openings shows this growth trajectory will continue through 2025, with another 799 new hotels/85,654 rooms forecast to open by year-end 2025 and further growth anticipated for 2026 and beyond.

Dallas Dominates U.S. Hotel Construction Boom: Q4 ’23 Report Reveals Record-High Project and Room Counts

In the ever-changing landscape of the U.S. hospitality industry, the Q4 2023 U.S. Construction Pipeline Trend Report by Lodging Econometrics (LE) sheds light on dynamic trends across key markets.

Dallas emerges as a powerhouse, leading the nation with a record-breaking 193 projects/22,291 rooms, signifying Dallas’s robust growth and confidence in the hospitality sector. Following closely is Atlanta, setting its own record with 151 projects/18,730 rooms. Nashville joins the ranks with 123 projects/16,148 rooms, followed by Phoenix with 122 projects/15,977 rooms, and the Inland Empire with 116 projects/11,649 rooms.

At the Q4 close, New York City continues to have the greatest number of projects under construction with 44 projects/7,338 rooms. Dallas follows with 28 projects/3,607 rooms, then Atlanta with 25 projects/4,279 rooms, Phoenix with 24 projects/4,247 rooms, and finally the Inland Empire with 22 projects/2,275 rooms.

Dallas looks set to maintain its momentum; leading both projects scheduled to start in the next 12 months and early planning stages of the hotel construction pipeline. Other markets like Atlanta, Nashville, Inland Empire, Phoenix, and Los Angeles follow suit, signifying a dynamic landscape of upcoming projects.

Atlanta takes the lead in new projects announced in Q4 with 16 projects/1,572 rooms, followed closely by Phoenix with 15 projects/1,832 rooms, then Dallas with 14 projects/1,706 rooms, Austin with 11 projects/1,007 rooms, and then Fort-Worth/Arlington with 10 projects/1,506 rooms.

The U.S. continues to witness strong renovation and conversion pipeline activity. Forty-three of the top 50 markets in the U.S. currently have 10 or more hotels undergoing renovation or conversion at the end of the quarter. Atlanta leads the charge with a combined total of 33 projects/3,903 rooms. Las Vegas, Dallas, Chicago, New York City, and Houston also contribute significantly to this trend, reflecting an industry focus on revitalizing existing structures.

Throughout 2023, the U.S. saw 474 hotel openings adding 60,436 rooms to the U.S. supply total. The markets with the highest number of new openings through year-end are New York City with 19 hotels/4,308 rooms, Atlanta with 13 hotels/1,279 rooms, Inland Empire with 11 hotels/1,032 rooms, Phoenix with 10 hotels/1,339 rooms, and Houston with 10 hotels/1,327 rooms.

Looking ahead to 2024, the U.S. markets forecast to open the greatest number of new hotels are New York City with 28 projects/3,050 rooms, Dallas with 18 projects/2,333 rooms, Phoenix with 17 projects/3,070 rooms, Atlanta with 15 projects/2,808 rooms, and the Inland Empire with 15 projects/1,559 rooms. In 2025, LE analysts expect the Inland Empire to open the most new hotels with 22 projects/2,074 rooms, followed closed by Dallas and Atlanta, each with 21 projects. These forecasts provide valuable insights into the ongoing evolution of the U.S. hotel landscape.

Lodging Econometrics (LE) Unveils Enhanced Multi-Language Localization Capabilities in its Database Platform to Transform the User Experience and Drive Global Engagement

Lodging Econometrics (LE), a leading provider of global lodging real estate intelligence, announces the launch of multi-language localization capabilities within its renowned Business Development Database of hotel development intelligence & decision-maker contacts. This groundbreaking update is poised to revolutionize the user experience, offering access to and understanding of crucial hotel development data in a user’s preferred language, thereby allowing clients to discover more new business opportunities.

Key Highlights of the Update:

Comprehensive Localization: This new premium update introduces a specialized localization dropdown selector, enabling clients to localize all elements within LE’s database, except for letterheads, to Simplified Chinese, Spanish, Portuguese, French, German, Italian, or Hindi. This enhancement ensures that every aspect of the user interface is tailored to resonate with local audiences, fostering deeper engagement and understanding.

Future-Ready Solutions: In an era marked by increasing globalization, LE’s enhanced multi-language localization capabilities empower clients to adapt and thrive in diverse markets, providing clients with the ability to navigate and utilize essential hotel development data in their preferred language, breaking down language barriers, and enhancing accessibility and understanding. It allows for seamless participation in international collaborations, expanding market presence with greater ease. This, in turn, opens more opportunities for smoother communication and collaboration in the global hotel development landscape, ultimately supporting business growth and success.

“We are incredibly excited to introduce these new localization capabilities to our esteemed clients,” said Timothy Ford, President at Lodging Econometrics. “This update underscores our commitment to innovation and client-centricity. By offering comprehensive localization tools, LE is committed to supporting multi-national and global clients and expanding our powerful and sophisticated platform, all while making our database platform easier to use across entire organizations. The result for our current and future clients is to provide them with a new competitive edge, global empowerment, and sustainable growth.”.