LE: Dallas top market for U.S. hotel construction pipeline

Marriott leads among brands, followed by Hilton, IHG

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Dallas, with 147 projects containing 17,711 rooms in its hotel construction pipeline, was the top market for the U.S. overall pipeline in the third quarter, according to Lodging Econometrics.

DALLAS WAS THE top market in the U.S. hotel construction pipeline in the third quarter of 2021 in terms of projects, according to Lodging Econometrics (LE). Also, Marriott International was the top brand for the quarter.

Dallas had 147 projects with 17,711 rooms for the quarter, topping the pipeline. It was followed by Atlanta with 139 projects containing 18,659 rooms and Los Angeles with 133 projects containing 22,145 rooms. The other two regions in the top five are New York City with 130 projects containing 22,417 rooms, and Houston with 90 projects containing 9,225 rooms. Together these cities account for 13 percent of the projects and 15 percent of rooms in the total U.S. pipeline.

The LE report said that increased demand for building materials and shortages in supply due to COVID-19 has led to higher prices and remain a major hurdle for all stakeholders. The U.S. opened 665 new hotels with 85,306 rooms in the first nine months of 2021. As many as 189 hotels with 25,995 rooms were opened in the third quarter alone, and in the top 50 markets 98 hotels with 15,454 rooms have started operations, it added.

U.S. supply growth is expected to be 2 percent by the end of 2021 and into 2022, according to LE.

“The top 25 U.S. markets account for 33 percent of all pipeline projects and 37 percent of all rooms in the pipeline. Now, nine markets in the U.S. have 20 or more projects under construction,” the LE report said. “Markets with the greatest number of projects already in the ground are New York with 95 projects containing 16,516 rooms, Atlanta with 33 projects containing 5,311 rooms, Dallas with 31 projects containing 4,399 rooms, Los Angeles with 30 projects containing 4,954 rooms, and Austin with 28 projects and 3,577 rooms.”

According to the report, Atlanta has the greatest number of projects scheduled to start construction in the next 12 months, with 54 projects and 7,529 rooms. It is followed by Dallas with 48 projects and 5,643 rooms, Los Angeles with 47 projects and 7,343 rooms, Phoenix with 44 projects and 4,834 rooms and Houston with 42 projects and 3,748 rooms.

“The top five markets with the greatest number of projects in the early planning stage in the third quarter are Dallas with 68 projects and 7,669 rooms, Los Angeles with 56 projects and 9,848 rooms, Atlanta with 52 projects and 5,819 rooms, Orlando with 41 projects and 7,754 rooms and Washington D.C. with 40 projects and 7,310 rooms,” the report said.

“Dallas has the highest number of new projects announced into the pipeline with 18 projects containing 1,756 rooms in the third quarter. Atlanta follows with 17 projects containing 1,777 rooms, Phoenix with 10 projects containing 1,819 rooms, and Houston with 9 projects containing 946 rooms.”

Currently, there are 1,253 hotels with 176,305 rooms under renovation or conversion across the country and 24 of the top 50 markets have 10 or more hotels undergoing renovation or conversion activity in the third quarter.

The markets with the highest number of new openings throughout the year so far are New York City with 21 hotels containing 3,554 rooms, Atlanta with 21 hotels containing 2,925 rooms, Orlando with 19 hotels containing 2,908 rooms, Houston with 16 hotels containing 2,166 rooms and Nashville with 16 hotels containing 2,116 rooms.

In 2021, New York City is forecasted to open 51 new hotels containing 7,074 rooms followed by Atlanta with 25 hotels containing 3,499 rooms, Nashville with 23 hotels containing 3,011 rooms, Houston with 23 hotels containing 2,787 rooms and Orlando with 21 hotels containing 3,393 rooms.

Marriott leads in brands, Hilton next

When it comes to franchise companies, Marriott tops the construction pipeline with 1,286 projects containing 166,174 rooms followed by Hilton with 1,223 projects containing 139,742 rooms, and InterContinental Hotels Group with 769 projects containing 77,558 rooms. These three companies comprise 68 percent of the total pipeline in the third quarter, LE report said.

The leading brands by project count are Hilton’s Home2 Suites with 402 projects containing 41,846 rooms, IHG’s Holiday Inn Express with 301 projects containing 28,852 rooms, and Marriott’s Fairfield Inn with 246 projects containing 23,653 rooms. They account for 20 percent of the pipeline.

“Other significant brands in the pipeline for these franchises include Hilton’s Hampton by Hilton, reaching a cyclical peak of 271 projects with 28,311 rooms and Tru by Hilton with 224 projects containing 21,518 rooms,” the report said.

Marriott opened 60 new hotels with 7,882 rooms accounting for 30 percent of all new hotel rooms in the third quarter, followed by Hilton’s 45 new hotels with 4,923 rooms accounting for 19 percent of the total projects. IHG opened 25 new hotels with 2,459 rooms accounting for 9 percent of rooms during the same period.

In a recent report, LE said that the U.S. hotel construction pipeline witnessed a slight increase in the third quarter of 2021 over second quarter.