Analysts at Lodging Econometrics (LE) report that in the third quarter of 2021 the total U.S. construction pipeline stands at 4,837 projects/592,259 rooms, down 8% by projects and 10% by rooms year-over-year (YOY). While project numbers have seen a slight increase over second quarter totals, overall, the construction pipeline remains largely muted due to a reduced inflow of new projects in the pipeline as compared to “pre-COVID levels,” and significant hotel openings during the first half of the year which exited the pipeline. The prolonged effects of the pandemic, above average inflation, rising interest rates, and material shortages and price increases have been and will continue to be key factors in decision-making for developers through the end of the year.
However, many developers really do have a long term positive outlook on hotel development as projects in the early planning stage are up considerably, with 1,978 projects/239,831 rooms, a 27% increase by projects and 25% by rooms YOY and reaching a cyclical peak this quarter. Conversely, projects scheduled to start construction in the next 12 months are down 14% by projects and 15% by rooms YOY, with 1,824 projects/210,189 rooms at the end of the third quarter. Projects under construction were also down in Q3, ending the quarter at 1,035 projects/142,239 rooms. This is largely due to projects that have completed construction and have opened. Presently, inflation and the increasing cost and sourcing of labor and materials, combined with supply chain shortages and delays, continue to be a major variable for hotel development. In response, developers are reworking budgets, revising plans to minimize costs, and adjusting construction start and project opening dates to endure the challenges of a recovering industry.
Though the path to full recovery may be longer than originally expected, two main steppingstones aiding in the recovery have been the recent rise in hotel stock values as well as increases in lending activity. Rebounding hotel stocks and better-than-expected hotel and travel demand throughout the summer season has renewed developer sentiment.
Renovation and conversion pipeline activity remains steady at the end of Q3 ‘21, with conversion projects hitting a cyclical peak, and ending the quarter at 752 projects/79,024 rooms. Combined, renovation and conversion activity accounts for 1,253 projects and 176,305 rooms.
Through the third quarter of 2021, the U.S. opened 665 new hotels with 85,306 rooms with another 221 projects/23,026 rooms anticipated to open by the end of the year, totaling 886 projects/108,332 rooms for 2021. Our research analysts expect an increase in new hotel openings in 2022, with 970 projects accounting for 110,123 rooms forecast to open in 2022 and another 961 projects/111,249 rooms anticipated to open in 2023.
Related Stories
Market Data | Nov 15, 2022
Construction demand will be a double-edged sword in 2023
Skanska’s latest forecast sees shorter lead times and receding inflation, but the industry isn’t out of the woods yet.
Reconstruction & Renovation | Nov 8, 2022
Renovation work outpaces new construction for first time in two decades
Renovations of older buildings in U.S. cities recently hit a record high as reflected in architecture firm billings, according to the American Institute of Architects (AIA).
Market Data | Nov 3, 2022
Building material prices have become the calm in America’s economic storm
Linesight’s latest quarterly report predicts stability (mostly) through the first half of 2023
Building Team | Nov 1, 2022
Nonresidential construction spending increases slightly in September, says ABC
National nonresidential construction spending was up by 0.5% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Hotel Facilities | Oct 31, 2022
These three hoteliers make up two-thirds of all new hotel development in the U.S.
With a combined 3,523 projects and 400,490 rooms in the pipeline, Marriott, Hilton, and InterContinental dominate the U.S. hotel construction sector.
Codes and Standards | Oct 26, 2022
‘Landmark study’ offers key recommendations for design-build delivery
The ACEC Research Institute and the University of Colorado Boulder released what the White House called a “landmark study” on the design-build delivery method.
Building Team | Oct 26, 2022
The U.S. hotel construction pipeline shows positive growth year-over-year at Q3 2022 close
According to the third quarter Construction Pipeline Trend Report for the United States from Lodging Econometrics (LE), the U.S. construction pipeline stands at 5,317 projects/629,489 rooms, up 10% by projects and 6% rooms Year-Over-Year (YOY).
Designers | Oct 19, 2022
Architecture Billings Index moderates but remains healthy
For the twentieth consecutive month architecture firms reported increasing demand for design services in September, according to a new report today from The American Institute of Architects (AIA).
Market Data | Oct 17, 2022
Calling all AEC professionals! BD+C editors need your expertise for our 2023 market forecast survey
The BD+C editorial team needs your help with an important research project. We are conducting research to understand the current state of the U.S. design and construction industry.
Market Data | Oct 14, 2022
ABC’s Construction Backlog Indicator Jumps in September; Contractor Confidence Remains Steady
Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to 9.0 months in September, according to an ABC member survey conducted Sept. 20 to Oct. 5.