At the end of the first quarter of 2020, analysts at Lodging Econometrics (LE) report that the total U.S. construction pipeline continued to expand year-over-year (YOY) to 5,731 projects/706,128 rooms, up 1% by projects and 3% by rooms. However, quarter-over-quarter, the pipeline has contracted slightly less than 1% by both project and room counts, down from 5,748 projects/708,898 rooms at the close of 2019.
Projects currently under construction stand at an all-time high of 1,819 projects/243,100 rooms. Projects scheduled to start construction in the next 12 months total 2,284 projects/264,286 rooms, while projects in the early planning stage stand at 1,628 projects/198,742 rooms. Projects in the early planning stage are up 8% by projects and 11% by rooms, YOY. Developers with projects under construction have generally extended their opening dates by two to four months. For projects scheduled to start construction in the next 12 months, on average, developers have adjusted their construction start and opening dates outwards by four to six months. Additionally, brands have been empathetic with developers by relaxing timelines as everyone adjusts to the COVID-19 interruptions. As a result, LE anticipates a stronger count of openings in the second half of 2020, compared to the first half.
In the first quarter of 2020, the U.S. opened 144 new hotels with 16,305 rooms. While the COVID-19 pandemic has slowed development, it has not completely stalled it. There were still 312 new projects with 36,464 rooms announced into the pipeline in the first quarter.
Many open or temporarily closed hotels have already begun or are in the planning stages of renovating and repositioning their assets while occupancy is low or non-existent. At the close of the first quarter, LE recorded 769 active renovation projects/163,030 rooms and 616 active conversion projects/69,258 rooms throughout the United States.
To date, the largest fiscal relief and stimulus efforts include the unprecedented $2 trillion CARES Act, the Paycheck Protection Program (PPP), and the Paycheck Protection Program Liquidity Facility (PPPLF), with a third phase of relief having been signed by the president last week. This third phase includes nearly $500 billion to further support the small-business loan program, as well as provide additional critical funding needed for hospitals and comprehensive testing. A phase four “CARES Act 2” package is already being discussed.
In order to support the economy and build liquidity, the Federal Reserve cut interest rates to almost zero; reduced bank reserve requirements to zero; rapidly purchased hundreds of billions of dollars in treasury bonds and mortgage-backed securities; bought corporate and municipal debt; and extended emergency credit to non-banks. The Federal Reserve has signaled that it will provide more support to the economy if warranted.
Although there are discussions about opening parts of the country that are beginning to stabilize; it will be measured with phased openings designed to effectively balance a highly desired economic ramp up while following prudent health and safety precautions.
*COVID-19 (coronavirus) did not have a full impact on first quarter 2020 U.S. results reported by LE. Only the last 30 days of the quarter were affected. LE’s market intelligence department has and will continue to gather the necessary global intelligence on the supply side of the lodging industry and make that information available to our subscribers. It is still early to predict the full impact of the outbreak on the lodging industry. We will have more information to report in the coming months.
Related Stories
Engineers | May 3, 2017
At first buoyed by Trump election, U.S. engineers now less optimistic about markets, new survey shows
The first quarter 2017 (Q1/17) of ACEC’s Engineering Business Index (EBI) dipped slightly (0.5 points) to 66.0.
Market Data | May 2, 2017
Nonresidential Spending loses steam after strong start to year
Spending in the segment totaled $708.6 billion on a seasonally adjusted, annualized basis.
Market Data | May 1, 2017
Nonresidential Fixed Investment surges despite sluggish economic in first quarter
Real gross domestic product (GDP) expanded 0.7 percent on a seasonally adjusted annualized rate during the first three months of the year.
Industry Research | Apr 28, 2017
A/E Industry lacks planning, but still spending large on hiring
The average 200-person A/E Firm is spending $200,000 on hiring, and not budgeting at all.
Market Data | Apr 19, 2017
Architecture Billings Index continues to strengthen
Balanced growth results in billings gains in all regions.
Market Data | Apr 13, 2017
2016’s top 10 states for commercial development
Three new states creep into the top 10 while first and second place remain unchanged.
Market Data | Apr 6, 2017
Architecture marketing: 5 tools to measure success
We’ve identified five architecture marketing tools that will help your firm evaluate if it’s on the track to more leads, higher growth, and broader brand visibility.
Market Data | Apr 3, 2017
Public nonresidential construction spending rebounds; overall spending unchanged in February
The segment totaled $701.9 billion on a seasonally adjusted annualized rate for the month, marking the seventh consecutive month in which nonresidential spending sat above the $700 billion threshold.
Market Data | Mar 29, 2017
Contractor confidence ends 2016 down but still in positive territory
Although all three diffusion indices in the survey fell by more than five points they remain well above the threshold of 50, which signals that construction activity will continue to be one of the few significant drivers of economic growth.
Market Data | Mar 24, 2017
These are the most and least innovative states for 2017
Connecticut, Virginia, and Maryland are all in the top 10 most innovative states, but none of them were able to claim the number one spot.
