LE: U.S. hotel construction pipeline marginally down in Q3

Many projects move on while developers remain cautious

U.S. hotel construction slowed 7 percent by projects and 6 percent by rooms in the third quarter as developers continue to closely monitor the impact the coronavirus will have on travel demand, according to a report from Lodging Econometrics.

THE LATEST REPORT by a global hotel intelligence firm has found out that the U.S. hotel construction pipeline was down slightly in the third quarter of this year.

The total number of hotels in the U.S. pipeline stands at 5,282 projects with 655,026 rooms, down 7 percent by projects and 6 percent by rooms in the third quarter, year-over-year, said the latest U.S. hotel construction pipeline trend report by Lodging Econometrics.

According to the report, projects currently under construction stand at 1,610 with 216,136 rooms, down 7 percent by projects and 8percent by rooms, respectively, when compared to last year.

During the third quarter, the U.S. opened 599 new hotels with 68,712 rooms with another 326 projects and 35,324 rooms anticipated to open by the end of 2020, totaling 925 projects and 104,036 rooms.

According to the report, hotel construction projects exiting the pipeline and moving to a cancelled or on hold status in the third quarter stood at 191 projects and 21,859 rooms.

Hotel projects in the U.S. scheduled to start construction in the next 12 months total 2,113 projects and 246,528 rooms, while projects in the early planning stage stand at 1,559 projects and 192,362 rooms, an increase not only YOY but quarter-over-quarter as well, the LE report said.

LE expects another 960 projects with 113,247 rooms to open in 2021.

“As expected, the hotel construction pipeline is off more substantially in Q3 as compared to Q2 in 2020. This is due largely in part to an acceleration of new hotel openings in Q2 as a result of a cyclical high number of projects under construction in Q1 that were delayed and later opened in the second quarter. Secondly, new project announcements continue to be muted,” the report said.

“Despite the decrease YOY, projects that are currently under construction continue to move forward towards their opening. New hotel openings continue to outpace projects moving to under construction. Developers with projects scheduled to start construction in the next 12 months continue to adjust their construction start and opening dates, minimize carrying costs, and plan to open in a more robust operating environment.”

LE’s previous report reported an increase in construction during the second quarter.