Dive Brief:
- The global hotel construction pipeline hit all-time high project counts in the fourth quarter of 2023, according to a report from Lodging Econometrics. The global pipeline reached 15,196 projects, or 2.37 million rooms, in the quarter, up 7% for projects and 3% for rooms year over year.
- The U.S. led all other countries with the largest hotel construction pipeline worldwide, reaching a record 5,964 projects, or 693,963 rooms. China followed the U.S., reaching its all-time high of 3,788 projects, or 691,772 rooms.
- Dallas and Atlanta led other global markets with the largest hotel construction pipelines. Lodging Econometrics previously forecasted continued pipeline growth across U.S. markets in 2024, bolstered by “less expensive borrowing costs” that will provide “long-awaited relief on interest rates.”
Dive Insight:
The number of hotels under construction globally was up 2% year over year in the fourth quarter, reaching 6,160 projects, or 1.1 million rooms, according to Lodging Econometrics.
The number of projects scheduled to start construction in the next 12 months was also up 7% year over year in the quarter, reaching 3,850 projects, or 536,588 rooms. Projects and rooms in the early planning stage climbed to all-time highs of 5,186 projects, or 734,391 rooms, up 12% and 6% year over year, respectively.
Additionally, renovation and conversion projects remained desirable, with the global pipeline at the highest it has ever been, reaching 3,291 projects, or 510,584 rooms, in Q4. For several major hotel companies, conversions drove portfolio growth in the quarter.
The U.S. led all other countries with the largest hotel construction pipeline and also boasted three of the five cities, globally, with the largest pipeline totals in Q4 — Dallas, with 193 projects, or 22,291 rooms; Atlanta, with 151 projects, or 18,730 rooms; and Nashville, with 123 projects, or 16,148 rooms. Chengdu, China, also ranked among the top five cities.
Local hospitality experts in Dallas and Atlanta previously told Hotel Dive that the cities’ pipeline growth has been bolstered by heightened travel demand, including business and group.
In a January statement, Lodging Econometrics said the Federal Reserve’s recent signaling of interest rate cuts in 2024 and additional cuts in 2025 sends “a positive but cautious outlook for U.S. hotel development in the year ahead.”
The potential rate cuts are expected to have “a favorable impact not only on new construction but acquisitions, renovations, and conversions,” Lodging Econometrics said in January, adding that lending volume will likely increase slowly in the first half of 2024 and gradually pick up the pace in the second half of the year.
