In the latest United States Construction Pipeline Trend Report from Lodging Econometrics (LE), analysts report that hotel construction pipeline projects in the U.S. continue to increase, standing at 5,545 projects/658,207 rooms at the close of Q1 2023. Up 9% by both projects and rooms year-over-year (YOY); project totals at Q1 ‘23 are just 338 projects, or 5.7%, behind the all-time high of 5,883 projects recorded in Q2 2008.
At the close of the first quarter, projects currently under construction stand at 1,051 projects/140,365 rooms, each showing 9% growth YOY. Projects scheduled to start construction in the next 12 months are at 2,060 projects/241,568 rooms, each up 8% YOY.
Projects in the early planning stage account for 44% of the projects in the total U.S. construction pipeline at Q1. Early planning projects increased 10% YOY, setting an all-time high of 2,434 projects/276,274 rooms.
This is the fourth consecutive quarter of total pipeline growth for the U.S., which can be, in part, attributed to the robust recovery of travel demand. Increased consumer confidence and spending activity has fueled strong occupancy and rate growth throughout the last twelve months as well.
Developers are motivated to sign new projects anticipating more favorable financing conditions in the coming quarters. Owners are eager to wrap up existing brand conversion and renovation projects, which have been a substantial focus for many quarters now.
The U.S. hotel construction pipeline is expected to grow modestly or just incrementally through 2023. There are no growth spikes expected this year. The pipeline is back loaded, meaning there is ample opportunity for vendors/suppliers in the industry, and third party management companies.
At the Q1 close, sixty-two percent of projects in the total pipeline are concentrated within the upscale and upper midscale chain scales. These two chain scales continue to dominate the pipeline and that is not expected to change anytime soon.
Renovation and brand conversion activity in the U.S. continues to boom in early 2023, reaching record project counts of 1,953 hotels/253,533 rooms, for a 38% YOY increase by projects and a 37% YOY increase by rooms. LE expects renovation and conversion activity to continue into 2023 as owners spend to bring their hotels into alignment with current brand standards or look elsewhere for new brand identification.
A total of 103 new hotels/11,762 rooms opened in the U.S. in the first quarter. For the remainder of the year, LE forecasts another 493 new hotel projects/59,355 rooms to open, representing a combined 1.3% supply growth rate in 2023. LE analysts expect the upward growth in new hotel openings to continue with an additional 699 new hotel projects/81,574 rooms anticipated to open in 2024, for a 1.4% supply increase.
Marriott, Hilton, IHG Continue to Dominate the U.S. Hotel Construction Pipeline
Marriott International (Marriott) tops the charts with the greatest number of projects in the U.S. hotel construction pipeline, at Q1 2023, with 1,499 projects/181,377 rooms, followed closely by Hilton Worldwide (Hilton), with a record-high count of 1,436 projects/161,359 rooms, and then InterContinental Hotels Group (IHG) with 809 projects/80,679 rooms. Combined, these three franchise companies comprise 68% of the projects in the total U.S. pipeline.
Marriott also has the most projects and room counts in each stage of the pipeline at Q1, with 279 projects/38,156 rooms currently under construction, 763 projects/90,038 rooms scheduled to start construction in the next 12 months, and 457 projects/53,183 rooms in early planning.
The leading brands by project count for the three companies with the largest pipelines in the U.S. at Q1 are Home2 Suites by Hilton with all-time highs by projects and rooms of 546 projects/56,001 rooms, Marriott’s TownePlace Suites, also reaching all-time highs by projects and rooms at Q1, with 333 projects/31,068 rooms, and IHG’s Holiday Inn Express brand with 301 projects/28,371 rooms. These three brands collectively represent 21% of the projects in the total U.S. hotel construction pipeline at the close of Q1 2023.
LE recorded record-high conversion pipeline totals of 1,079 projects/110,084 rooms for the U.S. in the first quarter of 2023. Of these conversion totals, Hilton had the most conversion projects and room totals ever recorded by LE with 105 projects/14,456 rooms, similarly, Marriott had a record 100 conversion projects, accounting for 13,465 rooms, and IHG had 52 conversion projects/6,2543 rooms. These three franchise companies account for 31% of all the rooms in the conversion pipeline across the country.
The franchise companies with the greatest number of new project announcements in the first quarter were: Hilton with 110 projects/11,790 rooms, Marriott with 61 projects/6,730 rooms, and IHG with 33 projects/3,103 rooms. These companies represent 60% of all new projects announced in the U.S. in Q1 2023.
In Q1 2023, Marriott opened 33 new hotels with 3,711 rooms. Hilton opened 24 new hotels with 2,781 rooms, and IHG opened 6 new hotels with 629 rooms. The LE forecast for new hotel openings in 2023 anticipates that Marriott will open a total of 152 new hotel projects/19,064 rooms by year-end, Hilton is forecasted to open 141 new hotel projects/16,980 rooms in 2023, and IHG is expected to open 88 new hotel projects/9,975 rooms. These three franchise companies collectively account for 64% and 65%, respectively, of new hotel projects and rooms forecast to open in 2023.
Related Stories
| Aug 11, 2010
And the world's tallest building is…
At more than 2,600 feet high, the Burj Dubai (right) can still lay claim to the title of world's tallest building—although like all other super-tall buildings, its exact height will have to be recalculated now that the Council on Tall Buildings and Urban Habitat (CTBUH) announced a change to its height criteria.
| Aug 11, 2010
Spa resort in harmony with mountain setting
The Sparkling Hill Resort and Wellness Hotel in Vernon, B.C., looks as if it was chiseled out of bedrock and jutting from the mountainside. Designed by the Victoria, B.C., office of Cannon Design, the 240,000-sf resort has 152 guest rooms with floor-to-ceiling windows and spa-like bathrooms, as well as a signature 20,000-sf whole-body wellness spa with treatment rooms designed to feel like they...
| Aug 11, 2010
Triangular tower targets travelers
Chicago-based Goettsch Partners is designing a new mixed-use high-rise for the Chinese city of Dalian, located on the Yellow Sea coast. Developed by Hong Kong-based China Resources Land Limited, the tower will have almost 1.1 million sf, which includes a 377-room Grand Hyatt hotel, 84 apartments, three restaurants, banquet space, and a spa and fitness center.
| Aug 11, 2010
Expanding retail complex is LEED pre-certified
The Promenade at Coconut Creek in Broward County, Fla., a live-work-play shopping and lifestyle center, is being expanded by 105,000 sf. When phase II of the 335,000-sf project is complete, the facility will house 75 retailers, restaurants, and related services, making it one of the largest mixed-use projects in northern Broward County.
| Aug 11, 2010
CityCenter projects get LEED Gold
MGM Mirage and Infinity World Development have received LEED Gold certification for the first three CityCenter projects: the ARIA Resort hotel tower, ARIA Resort convention center and theater, and the Vdara Hotel (above). The CityCenter developers anticipate Gold or Silver LEED certification for the project's remaining developments, which include a Mandarin Oriental hotel, a 500,000-sf retail a...
| Aug 11, 2010
Philadelphia cancer center seeks LEED certification
The New York office of Thornton Tomasetti provided structural engineering services for the Ruth and Raymond Perelman Center for Advanced Medicine in Philadelphia, a $232 million medical research center and advanced treatment center for cancer and cardiovascular disease. Designed by a joint venture of Perkins Eastman Architects and Rafael Vinõly Architects, the 340,000-sf facility will hous...
| Aug 11, 2010
High-level NICU opens in Washington, D.C.
Design to the highest distinction available by the American Academy of Pediatrics, the new Level IIIC neonatal intensive care unit (NICU) at Children's National Medical Center in Washington D.C., is equipped to care for the sickest premature babies, including those that require open-heart surgery. The 54-bed facility, designed by Karlsberger with KLMK Group as space planner, is four times large...
| Aug 11, 2010
RMJM unveils design details for $1B green development in Turkey
RMJM has unveiled the design for the $1 billion Varyap Meridian development it is master planning in Istanbul, Turkey's Atasehir district, a new residential and business district. Set on a highly visible site that features panoramic views stretching from the Bosporus Strait in the west to the Sea of Marmara to the south, the 372,000-square-meter development includes a 60-story tower, 1,500 resi...
| Aug 11, 2010
San Bernardino health center doubles in size
Temecula, Calif.-based EDGE was awarded the contract for California State University San Bernardino's health center renovation and expansion. The two-phase, $4 million project was designed by RSK Associates, San Francisco, and includes an 11,000-sf, tilt-up concrete expansion—which doubles the size of the facility—and site and infrastructure work.
| Aug 11, 2010
'Feebate' program to reward green buildings in Portland, Ore.
Officials in Portland, Ore., have proposed a green building incentive program that would be the first of its kind in the U.S. Under the program, new commercial buildings, 20,000 sf or larger, that meet Oregon's state building code would be assessed a fee by the city of up to $3.46/sf. The fee would be waived for buildings that achieve LEED Silver certification from the U.
