At the end of the first quarter of 2019, analysts at Lodging Econometrics (LE) reported that the total U.S. construction pipeline continued to expand with 5,647 projects/687,941 rooms, up a strong 7% by projects and 8% by rooms year-over-year (YOY). Pipeline totals are a mere 236 projects, or 4%, shy of the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008. The record should be pierced later in the year. Conversions and renovations are already at record levels.
Projects currently under construction stand at 1,709 projects/227,924 rooms with projects scheduled to start construction in the next 12 months at 2,429 projects/281,395 rooms. Projects in the early planning stage stand at 1,509 projects/178,622 rooms.
The upscale, upper-midscale, and midscale chain scales, all reached record-highs for both projects and rooms. Sixty-six percent of projects in the total pipeline are concentrated in two chain scales: upscale and upper midscale.
Annualized construction starts are at the highest level since 2008. In 2019, LE forecasts a 2.2% supply growth rate with 1,038 new hotels/118,385 rooms expected to open. For 2020, LE anticipates 1,174 new hotel openings and 128,598 rooms.
Hotel operations had a good quarter but mostly from expense improvements. Only 7 of the top 25 markets showed occupancy increases, quarter-over-quarter (QOQ). Only 11 markets had rev-par increases. Overall, U.S. demand growth was up 2.4% while supply was up 2%.
Leading Markets in the U.S. Hotel Construction Pipeline
In the first quarter of 2019, analysts at Lodging Econometrics (LE) report that the top five markets with the largest hotel construction pipelines are New York City with 170 projects/29,247 rooms. Next are Dallas and Los Angeles, both at record highs, with 163 projects/19,689 rooms and 158 projects/25,578 rooms, respectively. Houston follows with 151 projects/15,643 rooms, and Nashville with 116 projects/15,599 rooms.
Markets with the greatest number of projects already under construction are New York with 119 projects/20,068 rooms, Dallas with 48 projects/6,265 rooms, and Los Angeles with 42 projects/6,288 rooms. Houston has 36 projects/4,162 rooms while Nashville, Austin, and San Jose all have 34 projects presently under construction.
Reflective of the increasing pipeline, LE’s forecast for new hotel openings will continue to rise through 2020. In 2019, New York City tops the list with 63 new hotels expected to open with 9,605 rooms, followed by Dallas with 30 projects/3,604 rooms, Houston with 28 projects/3,342 rooms, Austin with 25 projects/2,512 rooms, and Nashville with 23 projects/3,030 rooms. In the 2020 forecast, New York continues to lead with the highest number of new hotels anticipated to open with 44 projects/6,225 rooms followed by Los Angeles with 35 projects/5,140 rooms and Dallas with 33 projects/4,163 rooms.
The number of markets where supply growth is now exceeding demand growth continues to increase. At the first quarter, 18 of the top 25 markets experienced the shift, up from 12 of the top 25 markets at the end of the fourth quarter of 2018.
Markets of concern where new supply is already outpacing demand and future new openings are forecasted to be high are Houston, New York, Dallas, and Los Angeles.
Related Stories
Market Data | Aug 29, 2017
Hidden opportunities emerge from construction industry challenges
JLL’s latest construction report shows stability ahead with tech and innovation leading the way.
Market Data | Aug 28, 2017
U.S. hotel construction pipeline is up 7% year-over-year
For the economy, the rate of growth may be low but it’s running on all cylinders.
Market Data | Aug 23, 2017
Architecture Billings Index growth moderates
“The July figures show the continuation of healthy trends in the construction sector of our economy,” said AIA Chief Economist, Kermit Baker.
Architects | Aug 21, 2017
AIA: Architectural salaries exceed gains in the broader economy
AIA’s latest compensation report finds average compensation for staff positions up 2.8% from early 2015.
Market Data | Aug 20, 2017
Some suburban office markets are holding their own against corporate exodus to cities
An analysis of mortgage-backed loans suggests that demand remains relatively steady.
Market Data | Aug 17, 2017
Marcum Commercial Construction Index reports second quarter spending increase in commercial and office construction
Spending in all 12 of the remaining nonresidential construction subsectors retreated on both an annualized and monthly basis.
Industry Research | Aug 11, 2017
NCARB releases latest data on architectural education, licensure, and diversity
On average, becoming an architect takes 12.5 years—from the time a student enrolls in school to the moment they receive a license.
Market Data | Aug 4, 2017
U.S. grand total construction starts growth projection revised slightly downward
ConstructConnect’s quarterly report shows courthouses and sports stadiums to end 2017 with a flourish.
Market Data | Aug 2, 2017
Nonresidential Construction Spending falls in June, driven by public sector
June’s weak construction spending report can be largely attributed to the public sector.
Market Data | Jul 31, 2017
U.S. economic growth accelerates in second quarter; Nonresidential fixed investment maintains momentum
Nonresidential fixed investment, a category of GDP embodying nonresidential construction activity, expanded at a 5.2% seasonally adjusted annual rate.
