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 | May 18, 2022
Architecture Billings Index moderates slightly, remains strong
For the fifteenth consecutive month architecture firms reported increasing demand for design services in April, according to a new report today from The American Institute of Architects (AIA).
Market Data | May 12, 2022
Monthly construction input prices increase in April
Construction input prices increased 0.8% in April compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Market Data | May 10, 2022
Hybrid work could result in 20% less demand for office space
Global office demand could drop by between 10% and 20% as companies continue to develop policies around hybrid work arrangements, a Barclays analyst recently stated on CNBC.
Market Data | May 6, 2022
Nonresidential construction spending down 1% in March
National nonresidential construction spending was down 0.8% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Apr 29, 2022
Global forces push construction prices higher
Consigli’s latest forecast predicts high single-digit increases for this year.
Market Data | Apr 29, 2022
U.S. economy contracts, investment in structures down, says ABC
The U.S. economy contracted at a 1.4% annualized rate during the first quarter of 2022.
Market Data | Apr 20, 2022
Pace of demand for design services rapidly accelerates
Demand for design services in March expanded sharply from February according to a new report today from The American Institute of Architects (AIA).
Market Data | Apr 14, 2022
FMI 2022 construction spending forecast: 7% growth despite economic turmoil
Growth will be offset by inflation, supply chain snarls, a shortage of workers, project delays, and economic turmoil caused by international events such as the Russia-Ukraine war.
Industrial Facilities | Apr 14, 2022
JLL's take on the race for industrial space
In the previous decade, the inventory of industrial space couldn’t keep up with demand that was driven by the dual surges of the coronavirus and online shopping. Vacancies declined and rents rose. JLL has just published a research report on this sector called “The Race for Industrial Space.” Mehtab Randhawa, JLL’s Americas Head of Industrial Research, shares the highlights of a new report on the industrial sector's growth.
Codes and Standards | Apr 4, 2022
Construction of industrial space continues robust growth
Construction and development of new industrial space in the U.S. remains robust, with all signs pointing to another big year in this market segment
