Analysts at Lodging Econometrics (LE) report that in the third quarter of 2021 the total U.S. construction pipeline stands at 4,837 projects/592,259 rooms, down 8% by projects and 10% by rooms year-over-year (YOY). While project numbers have seen a slight increase over second quarter totals, overall, the construction pipeline remains largely muted due to a reduced inflow of new projects in the pipeline as compared to “pre-COVID levels,” and significant hotel openings during the first half of the year which exited the pipeline. The prolonged effects of the pandemic, above average inflation, rising interest rates, and material shortages and price increases have been and will continue to be key factors in decision-making for developers through the end of the year.
However, many developers really do have a long term positive outlook on hotel development as projects in the early planning stage are up considerably, with 1,978 projects/239,831 rooms, a 27% increase by projects and 25% by rooms YOY and reaching a cyclical peak this quarter. Conversely, projects scheduled to start construction in the next 12 months are down 14% by projects and 15% by rooms YOY, with 1,824 projects/210,189 rooms at the end of the third quarter. Projects under construction were also down in Q3, ending the quarter at 1,035 projects/142,239 rooms. This is largely due to projects that have completed construction and have opened. Presently, inflation and the increasing cost and sourcing of labor and materials, combined with supply chain shortages and delays, continue to be a major variable for hotel development. In response, developers are reworking budgets, revising plans to minimize costs, and adjusting construction start and project opening dates to endure the challenges of a recovering industry.
Though the path to full recovery may be longer than originally expected, two main steppingstones aiding in the recovery have been the recent rise in hotel stock values as well as increases in lending activity. Rebounding hotel stocks and better-than-expected hotel and travel demand throughout the summer season has renewed developer sentiment.
Renovation and conversion pipeline activity remains steady at the end of Q3 ‘21, with conversion projects hitting a cyclical peak, and ending the quarter at 752 projects/79,024 rooms. Combined, renovation and conversion activity accounts for 1,253 projects and 176,305 rooms.
Through the third quarter of 2021, the U.S. opened 665 new hotels with 85,306 rooms with another 221 projects/23,026 rooms anticipated to open by the end of the year, totaling 886 projects/108,332 rooms for 2021. Our research analysts expect an increase in new hotel openings in 2022, with 970 projects accounting for 110,123 rooms forecast to open in 2022 and another 961 projects/111,249 rooms anticipated to open in 2023.
Related Stories
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
Market Data | Apr 4, 2023
Nonresidential construction spending up 0.4% in February 2023
National nonresidential construction spending increased 0.4% in February, according to an Associated Builders and Contractors analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $982.2 billion for the month, up 16.8% from the previous year.
Multifamily Housing | Mar 24, 2023
Average size of new apartments dropped sharply in 2022
The average size of new apartments in 2022 dropped sharply in 2022, as tracked by RentCafe. Across the U.S., the average new apartment size was 887 sf, down 30 sf from 2021, which was the largest year-over-year decrease.
Multifamily Housing | Mar 14, 2023
Multifamily housing rent rates remain flat in February 2023
Multifamily housing asking rents remained the same for a second straight month in February 2023, at a national average rate of $1,702, according to the new National Multifamily Report from Yardi Matrix. As the economy continues to adjust in the post-pandemic period, year-over-year growth continued its ongoing decline.
Contractors | Mar 14, 2023
The average U.S. contractor has 9.2 months worth of construction work in the pipeline, as of February 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 9.2 months in February, according to an ABC member survey conducted Feb. 20 to March 6. The reading is 1.2 months higher than in February 2022.
Industry Research | Mar 9, 2023
Construction labor gap worsens amid more funding for new infrastructure, commercial projects
The U.S. construction industry needs to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet demand for labor, according to a model developed by Associated Builders and Contractors. The construction industry averaged more than 390,000 job openings per month in 2022.
Market Data | Mar 7, 2023
AEC employees are staying with firms that invest in their brand
Hinge Marketing’s latest survey explores workers’ reasons for leaving, and offers strategies to keep them in the fold.
Multifamily Housing | Feb 21, 2023
Multifamily housing investors favoring properties in the Sun Belt
Multifamily housing investors are gravitating toward Sun Belt markets with strong job and population growth, according to new research from Yardi Matrix. Despite a sharp second-half slowdown, last year’s nationwide $187 billion transaction volume was the second-highest annual total ever.
