LE: Construction pipeline dips some in first quarter

The decline is less than what was seen in 2008 recession

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The U.S. hotel construction pipeline contained 4,967 projects with 622,218 rooms at the end of the quarter, according to Lodging Econometrics’ Construction Pipeline Trend Report. That’s down from the end of 2020 when there were 5,216 projects with 650,222 rooms.

THE U.S. HOTEL construction pipeline took a slight dip in the first quarter, according to Lodging Econometrics. However, the slowdown was not unexpected considering the COVID-19 pandemic, and the declines were not as bad as in previous recessions.

The pipeline contained 4,967 projects with 622,218 rooms at the end of the quarter, according to LE’s Construction Pipeline Trend Report. By the end of 2020 there were 5,216 projects with 650,222 rooms, according to LE’s previous report.

During the recession of 2008 and 2009 the pipeline saw much more significant drops in projects. Also during the first quarter, projects in the early planning stage were higher on a year-over-year basis.

“Although hotel development may still be tepid in the first quarter, continued government support and the extension of programs has aided many businesses to get back on their feet as more and more are working to re-staff and re-open,” LE said in its report. “To date, nearly half of the eligible population is at least partially vaccinated, leading to an ease in requirements regarding group gatherings and indoor activities. Clinical trials of vaccines for children ages 12 to 15 have been highly effective and look very promising for another strong vaccine wave. Additionally, the CDC has announced that, so long as people continue to take COVID-19 precautions, fully vaccinated people are now safe to travel domestically. Americans are becoming more optimistic about summer travel and are making plans now. As a result, operating performance is expected to soar late this spring, summer, and fall.”

There were 1,311 projects with 179,304 rooms currently under construction in the first quarter.  Another 841 projects with 97,959 rooms opened in the U.S. by the end of 2020, and a total of 229 hotels with 27,528 rooms opened in the first quarter of 2021.

“As delayed fourth quarter openings are coming online, LE is forecasting 691 projects with 81,866 rooms to open by the end of 2021, representing a 2 percent increase in new hotel supply. For all of 2022, LE is forecasting 963 projects with 111,235 rooms to open and a 2 percent supply increase,” LE said. “Projects scheduled to start construction in the next 12 months total 1,866 projects/215,911 rooms. Of the 1,866 projects scheduled to begin in the next 12 months, 26.8 percent of these belong to extended-stay brands, a segment of the industry that developers have become increasingly interested in over the last few years. Projects in the early planning stage stand at 1,790 projects/227,003 rooms, up 10 percent by projects and 14 percent by rooms year-over-year.”

There were 1,198 projects with 190,475 rooms under renovation or conversion in the U.S. during the first quarter, down a little since seeing a slight increase at the end of 2020.