LE: U.S. pipeline slows 1 percent in pandemic

Some openings are delayed due to COVID-19

The U.S. hotel construction pipeline stayed in motion during the second quarter, losing only 1 percent growth from the same period last year, according to Lodging Econometrics.

THE COVID-19 PANDEMIC is barely slowing the rate of hotel construction in the U.S., according to Lodging Econometrics. During the second quarter the number of projects in the pipeline was down 1 percent from the same time last year.

There were 5,582 projects with 687,801 rooms with only some cancelations, postponements, and delays. All-time low interest rates are keeping the hotel construction business active, according to LE.

There are 1,771 projects with 235,467 rooms under construction, a 3 percent increase for projects and a 1 percent increase for rooms. Another 2,389 projects with 276,247 rooms are scheduled to start construction in the next 12 months, and there are 1,422 projects with 176,087 rooms in the early planning stage.

There have been some delays in openings for projects under construction, LE said, but the projects are moving head with extended deadlines. Developers with projects scheduled to start construction in the next 12 months continue to monitor current events and make adjustments to their construction start and opening dates.

In the U.S., 313 new hotels with 36,992 rooms opened during the first half of the year. Also, there were 481 new projects with 56,823 rooms announced into the pipeline during the same time, with 169 new project announcements with 20,359 rooms occurring in the second quarter.

“With franchise development staff largely working from home, non-essential travel halted, and with the on-going pandemic, the ability to get a new development deal signed has slowed. This has resulted in a 53 percent decrease in new project announcements compared to the second quarter of 2019 when 359 projects with 44,895 rooms were recorded,” LE said in its report. “With the arrival of summer, the country has begun to see an uptick in domestic leisure travel. As a result, more and more hotels are re-opening, and many others have begun to move-up renovation plans and/or are repositioning their property with a brand conversion. In the first half of 2020, LE recorded 1,465 active renovation projects with 314,043 rooms and 1,196 active conversion projects with 136,110 rooms throughout the U.S.”

LE reported similar growth in the U.S. pipeline during the first quarter.