Dive Brief:
- The U.S. hotel construction pipeline grew 9% year on year by projects in the third quarter of 2024, marking an all-time high for U.S. hotel projects, according to Lodging Econometrics’ Q3 2024 U.S. Hotel Construction Pipeline Trend Report.
- By rooms, the pipeline grew 7% year on year in Q3, Lodging Econometrics found. As of September, the U.S. hotel construction pipeline had increased for the seventh consecutive month, according to an STR report released last week.
- Upper midscale hotels, followed by upscale hotels, had the largest project counts in the pipeline, according to Lodging Econometrics. The number of luxury and midscale hotel rooms under construction, however, showed the highest growth in September, per STR.
Dive Insight:
At the close of the third quarter, there were 1,185 projects, or 148,716 rooms, under construction, according to Lodging Econometrics. Projects and rooms in the early planning stages, particularly, reached all-time highs — both up 17% year on year.
Also at the quarter’s close, the Dallas market had the largest hotel construction pipeline in the U.S., with a record 194 projects under construction. Dallas was followed by Atlanta; Nashville, Tennessee; Phoenix and Austin, Texas, according to Lodging Econometrics.
Together, the upper midscale and upscale chain scales comprised 60% of all projects in the total U.S. pipeline, Lodging Econometrics found, though the report noted that the midscale segment also showed “significant growth” of 19% by projects year on year.
STR found that upscale and upper midscale dominated September’s hotel rooms pipeline, specifically, with Vice President of Analytics Isaac Collazo noting that the segments accounted for approximately half of all rooms in the final phase of the pipeline in the month. Luxury and midscale rooms under construction showed the highest growth, up 48.5% and 34.5% year on year, respectively.
“Growth in rooms in construction has accelerated over the last seven months,” Collazo said in a statement. “Despite higher interest rates throughout 2024, developer appetite has remained strong. With the recent rate cut in September, and with more on the way, investor sentiment remains positive, as evidenced by continued double-digit growth across the planning and final planning stages of the pipeline.”
Further anticipated rate cuts are expected to be a catalyst for more hotel transactions, Kevin Davis, Americas CEO of JLL Hotels & Hospitality Group, shared at the Lodging Conference earlier this month. Extended Stay America President and CEO Greg Juceam also shared a positive outlook at the conference, saying, “Get your contractors and your project managers lined up now. … It’s going to be an amazing ride [in] 2026 and 2027.”
Looking forward, Lodging Econometrics forecasts that 759 hotels, or 86,264 rooms, will open in 2025, representing a 1.5% supply increase. The firm anticipates a further supply increase of 1.8% in 2026.
