At the close of 2021’s second quarter, analysts at Lodging Econometrics reported that the total U.S. construction pipeline stands at 4,787 hotels with 598,111 rooms, down 14 percent year over year by hotels from Q2 2020’s 5,582 hotels with 687,801 rooms. This year-over-year decline in pipeline totals is largely a result of hotels that were delayed in the under construction phase of the pipeline as a result of COVID, now having exited the pipeline and opened.
During the first and second quarters of 2021, the U.S. opened 472 new hotels with 59,034 rooms. LE is forecasting another 450 hotels with 51,754 rooms to open during 2021 for a total of 922 hotels with 110,788 rooms by year-end. This will represent a 2 percent increase in new supply for 2021. 1,008 hotels with 113,871 rooms are expected to open in 2022, representing a further 2 percent increase in new supply for 2022. For 2023, LE is expecting 997 hotels with 115,271 rooms to open—again, a 2 percent increase in new supply.
Following a nearly 16-month hiatus related to COVID-19 shutdowns, the first half of 2021 saw a substantial uptick in hotel bookings and travel reservation numbers. As vaccination rates rise and travel restrictions ease, consumer confidence continues to increase, and booking numbers move toward pre-pandemic levels. As demand increases, new hotel project announcements will soon follow. There were a total of 372 new hotels accounting for 45,084 rooms announced into the pipeline in the first half of 2021. Of those totals, 202 new project announcements with 25,653 rooms occurred in the second quarter. The arrival of summer, a rebounding demand for domestic business and leisure travel, combined with the recent pledge from the U.S. Department of Commerce to invest $750 million in the travel and tourism industries, has investors and developers feeling increasingly optimistic. This confidence has resulted in a 20 percent increase in new project announcements in Q2 2021 when compared to the second quarter of 2020 when 169 hotels with 20,359 rooms were recorded.
Hotels currently under construction stand at 1,165 hotels with 159,581 rooms. Hotels scheduled to start construction in the next 12 months total 1,843 hotels with 213,744 rooms. hotels in the early planning stage saw a 25 percent increase in hotels and a 28 percent increase in rooms year over year, standing at 1,779 hotels with 224,786 rooms. The increase in hotels in the early planning stage reflects a combination of developer’s confidence to initiate new construction hotels and the recalibration of some of their timelines for existing hotels.
As COVID-19 safety guidelines and restrictions evolve across the country and in anticipation of international travel bans being lifted, more hotels are reestablishing renovation plans, and/or are repositioning their properties with a brand conversion. In the first half of 2021, experts at LE recorded 1,152 active renovation hotels with 238,110 rooms and 1,181 active conversion hotels with 128,810 rooms throughout the United States.
