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 | May 22, 2018
Vacancies stable, rents rising, and pipeline receding, according to Transwestern’s 1Q US Office Market report
The Big Apple still leads the new construction charge.
Market Data | May 18, 2018
Construction employment rises in 38 states and D.C. from April 2017 to April 2018
California & West Virginia have biggest annual job gains, North Dakota has largest decline; California & Louisiana have largest monthly pickup, Indiana & North Dakota lead monthly drops.
High-rise Construction | May 18, 2018
The 100 tallest buildings ever conventionally demolished
The list comes from a recent CTBUH study.
Resiliency | May 17, 2018
Architects brief lawmakers and policy-makers on disaster recovery as hurricane season approaches
Urge senate passage of disaster recovery reform act; Relationship-building with local communities.
Market Data | May 17, 2018
These 25 cities have the highest urban infill development potential
The results stem from a COMMERCIALCafé study.
Market Data | May 10, 2018
Construction costs surge in April as new tariffs and other trade measures lead to significant increases in materials prices
Association officials warn that the new tariffs and resulting price spikes have the potential to undermine benefits of tax and regulatory reform, urge administration to reconsider.
Market Data | May 7, 2018
Construction employers add 17,000 jobs in April and 257,000 for the year
Unemployment rate for construction increases slightly compared to year earlier as higher pay levels appears to be attracting people with recent construction experience back into the workforce.
Market Data | May 2, 2018
Construction employment increases in 245 metro areas between March 2017 & 2018, as trade fights & infrastructure funding shortfalls loom
Houston-The Woodlands-Sugar Land, Texas and Weirton-Steubenville, W.Va.-Ohio experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines.
Market Data | May 2, 2018
Nonresidential Construction down in March, private sector falters, public sector unchanged
February’s spending estimate was revised roughly $10 billion higher.
Market Data | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
