According to Lodging Econometrics’ recently released Q2 2022 United States Construction Pipeline Trend Report, at the close of the second quarter, the top five markets with the largest hotel construction pipelines are Dallas, with a record-high count of 173 projects accounting for 20,707 rooms; Atlanta, with 140 hotels and 18,131 rooms; Los Angeles, with 124 hotels and 20,365 rooms; New York, with 113 hotels and 19,238 rooms; and Phoenix, with 108 hotels and 14,964 rooms.
According to LE analysts, many major markets and popular U.S. tourist destinations have seen a significant increase in demand throughout the first half of the year. Driven by robust leisure travel, group, and international travel, these markets are reporting the highest occupancy rates since the pandemic began in early 2020. Encouraged by 2022’s upward trend in hotel performance, owners, management groups, developers and investors are moving forward with development plans as evidenced by increasing counts at every stage of construction.
Top Markets
The five top markets with the most projects currently under construction are New York City, with 78 hotels and 13,063 rooms; Atlanta, with 25 hotels and 3,905 rooms; Dallas, with 25 hotels and 3,725 rooms; Phoenix, with 23 hotels and 4,955 rooms; Los Angeles, with 22 hotels and 3,606 rooms. Collectively, these five markets account for 22 percent of the total number of rooms currently under construction in the U.S. At Q2 ‘22, Atlanta has the most projects scheduled to start in the next 12 months, with 62 hotels and 8,020 rooms. Behind Atlanta, are Dallas, with 55 hotels and 6,465 rooms; Phoenix, with 49 hotels and 5,968 rooms; Houston, with 45 hotels and 4,619 rooms; and Los Angeles, with 43 hotels and 6,715 rooms. Dallas has the most projects in early planning with 93 hotels and 10,517 rooms. Los Angeles follows, with 59 hotels and 10,044 rooms. Next is Atlanta with 53 hotels and 6,206 rooms; Orlando, with 44 hotels and 7,640 rooms; and Washington, D.C. with 40 hotels and 5,659 rooms.
In the second quarter of 2022, Dallas recorded the highest count of new projects announced into the pipeline with 16 hotels and 1,654 rooms. Atlanta followed with 11 hotels and 1,206 rooms; then the Inland Empire, Calif., market with 11 hotels and 1,113 rooms; Houston with 9 hotels and 929 rooms; and Charlotte, N.C., with 9 hotels and 916 rooms. LE recorded a combined renovation and conversion pipeline total of 1,889 projects with 237,420 rooms for the U.S. The markets with the largest combined number of renovations and conversions are Houston with 42 hotels and 4,666 rooms, Atlanta with 39 hotels and 5,246 rooms, Chicago with 34 hotels and 4,908 rooms, Dallas with 30 hotels and 3,785 rooms, and San Diego with 28 hotels and 4,753 rooms.
Twenty-six percent of the new hotels forecast to open between now and the end of 2022 are concentrated within seven markets. These markets are New York, Austin, Atlanta, Los Angeles, Nashville, Detroit and Inland Empire. At Q2, the top 25 markets in the U.S. are forecast to open 46 percent of the rooms expected to open by year-end.
Of the top 50 markets in the U.S., the New York City market is forecast to open 58 hotels and 8,329 rooms by year-end, followed by Austin with 25 hotels and 3,291 rooms, Atlanta with 22 hotels and 2,598 rooms, Los Angeles with 18 hotels and 3,191 rooms, and then Nashville with 17 hotels and 2,630 rooms.
The top 50 markets saw 151 hotels and 18,966 rooms open in the first half of 2022. LE is forecasting these same 50 markets to open another 252 hotels and 33,948 rooms in the second half of the year, for a total of 403 hotels and 52,914 rooms by year-end 2022. In 2023, 366 projects accounting for 46,176 rooms are forecast to open within the top 50 markets, for a 1.7 percent growth rate and in 2024 LE analysts forecast 402 new hotel projects, accounting for 47,065 rooms to open, for a 1.7 percent growth rate.