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LE: U.S. hotel construction pipeline grew in third quarter

The return of summer travel drove a 10 percent increase in projects and 6 percent growth by rooms

LE: U.S. hotel construction pipeline grew in third quarter

THE U.S. HOTEL construction pipeline showed positive trends in the third quarter of 2022 as total projects stood at 5,317 containing 629,489 rooms, according to Lodging Econometrics. That’s up 10 percent by projects and 6 percent by rooms year-over-year.

There are 987 projects with 135,050 rooms under construction in the U.S. at the end of the third quarter, according to the U.S. Construction Pipeline Trend Report from LE. As many as 987 projects with 135,050 rooms are under construction during the period.


According to LE, 2,074 projects containing 236,894 rooms will start construction in the next 12 months, up 14 percent by projects and 13 percent by rooms year-over-year, respectively. Projects in the early planning stage reached record in the third quarter, with 2,256 projects containing 257,545 rooms, a 14 percent increase by projects and 7 percent increase in rooms when compared to same period last year.

“The lodging industry is healthy, and many hotel owners are expected to experience record high revenues in 2022. As lending rates have changed significantly in 2022 due to the Federal Reserve’s rate increases, ownership and management groups are finding that reinvesting in their current portfolios, whether that be renovating or repositioning to another brand, is a better return on investment right now,” the LE report said.

The LE report said that brand conversion room counts reached record highs of 988 projects with 99,474 rooms in the third quarter. Earlier, the highest count recorded in the third quarter of 2018 with 893 projects containing 140,440 rooms. Together, renovation and conversion activity accounts for 1,881 projects with 239,914 rooms, up 36 percent by projects and 50 percent by rooms year-over-year.

“Travel throughout the U.S., in all segments, saw steady recovery over the summer months and is expected to continue into the fall and winter months. New project announcements and construction starts continue to recover from the lows experienced during the COIVD pandemic,” the report said. “The new construction pipeline in the U.S. continues to grow, albeit, at a moderate, modest pace, with projects in the early planning stage establishing a new peak for this cycle. This peak signal a favorable outlook by developers for development conditions to improve in the near future.”

According to LE, the upper midscale chain scale continues to have the largest project count of all chain scales in the total U.S. construction pipeline with 2,127 projects containing 214,473 rooms. It is followed by upscale segment with 1,528 projects with 202,907 rooms, they account for 69 percent of all projects.

Home2 Suites by Hilton tops the upper midscale sector with 494 projects with 50,809 rooms, followed by InterContinental Hotels Group’s Holiday Inn Express with 297 projects containing 28,323 rooms,  and Marriott’s TownePlace Suites with 291 projects offering 27,329 rooms.

In the upscale segment, Marriott’s Residence Inn tops the pipeline with 234 projects with 28,659 rooms, followed by its SpringHill Suites brand with 148 projects containing 16,350 rooms and IHG’s Staybridge Suites with 125 projects with 12,962 rooms in Q3.

As many as 1,846 projects with 189,289 rooms in the construction pipeline are extended stay projects, accounting for 35 percent of projects. Home2 Suites by Hilton currently has the largest extended stay pipeline with 494 projects containing 50,809 rooms. It is followed by Marriott’s TownePlace Suites with 291 projects with 27,329 rooms and its Residence Inn brand with 234 projects with 28,659 rooms.

The U.S. opened 343 new hotels, accounting for 39,772 rooms in this year so far, with another 182 projects containing 22,261 rooms anticipated to open by the end of the year, a 1.1 percent increase in new hotel supply for 2022.

LE analysts expect new hotel openings to increase in 2023 and 2024, representing a 1.3 percent supply increase for 2023 and a 1.4 percent supply increase for 2024.

Earlier, LE reported that construction pipeline continued its growth at the end of the second quarter as well.

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