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
Contractors | Apr 19, 2023
Rising labor, material prices cost subcontractors $97 billion in unplanned expenses
Subcontractors continue to bear the brunt of rising input costs for materials and labor, according to a survey of nearly 900 commercial construction professionals.
Data Centers | Apr 14, 2023
JLL's data center outlook: Cloud computing, AI driving exponential growth for data center industry
According to JLL’s new Global Data Center Outlook, the mass adoption of cloud computing and artificial intelligence (AI) is driving exponential growth for the data center industry, with hyperscale and edge computing leading investor demand.
Healthcare Facilities | Apr 13, 2023
Healthcare construction costs for 2023
Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.
Higher Education | Apr 13, 2023
Higher education construction costs for 2023
Fresh data from Gordian breaks down the average cost per square foot for a two-story college classroom building across 10 U.S. cities.
Market Data | Apr 13, 2023
Construction input prices down year-over-year for first time since August 2020
Construction input prices increased 0.2% in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices rose 0.4% for the month.
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
Market Data | Apr 4, 2023
Nonresidential construction spending up 0.4% in February 2023
National nonresidential construction spending increased 0.4% in February, according to an Associated Builders and Contractors analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $982.2 billion for the month, up 16.8% from the previous year.
Multifamily Housing | Mar 24, 2023
Average size of new apartments dropped sharply in 2022
The average size of new apartments in 2022 dropped sharply in 2022, as tracked by RentCafe. Across the U.S., the average new apartment size was 887 sf, down 30 sf from 2021, which was the largest year-over-year decrease.
