Lodging Econometrics names top U.S. hotel construction markets

Analysts at Lodging Econometrics reported that the top five markets with the largest total hotel construction pipelines in Q3 by projects are: 

  1. Dallas with 147 hotels and 17,711 rooms 
  2. Atlanta with 139 hotels and 18,659 rooms 
  3. Los Angeles with 133 hotels and 22,145 rooms 
  4. New York City with 130 hotels and 22,417 rooms
  5. Houston with 90 hotels and 9,225 rooms 

These top five markets account for 13 percent of the projects and 15 percent of rooms in the total U.S. pipeline.

Top 25 Markets

The top 25 U.S. markets account for 33 percent of all pipeline projects and 37 percent of all rooms in the U.S. hotel construction pipeline. There are nine markets in the United States that have 20 or more projects under construction in their pipelines.

Markets with the greatest number of projects already in the ground are New York with 95 hotels and 16,516 rooms, Atlanta with 33 hotels and 5,311 rooms, Dallas with 31 hotels and 4,399 rooms, Los Angeles with 30 hotels and 4,954 rooms, and Austin, Texas, with 28 hotels and 3,577 rooms.

Atlanta has the greatest number of projects scheduled to start construction in the next 12 months, with 54 hotels and 7,529 rooms. Dallas follows with 48 hotels and 5,643 rooms, and then Los Angeles with 47 hotels and 7,343 rooms, Phoenix with 44 hotels and 4,834 rooms, and Houston with 42 hotels and 3,748 rooms.

The top five markets with the greatest number of projects in the early planning stage at the end of the third quarter are Dallas with 68 hotels and 7,669 rooms, Los Angeles with 56 hotels and 9,848 rooms, Atlanta with 52 hotels and 5,819 rooms, Orlando with 41 hotels and 7,754 rooms and Washington, D.C., with 40 hotels and 7,310 rooms.

The increased demand for building materials and shortages in supply in the wake of the COVID-19 pandemic have led to higher prices and continue to be major hurdles for contractors, developers and investors, according to LE. Nevertheless, in the third quarter, Dallas has the highest number of new projects announced into the pipeline with 18 hotels and 1,756 rooms. Atlanta follows with 17 hotels and 1,777 rooms, Phoenix with 10 hotels and 1,819 rooms, and then Houston with nine hotels and 946 rooms.

The renovation and conversion pipeline shows no sign of decline. Presently, there are 1,253 hotels and 176,305 rooms under renovation or conversion across the U.S., and 24 of the top 50 markets in the U.S. have 10 or more hotels undergoing renovation or conversion activity at the end of Q3 2021.

In the first three quarters of 2021, the U.S. opened 665 new hotels with 85,306 rooms. The markets with the highest number of new openings throughout the first three quarters are New York City with 21 hotels and 3,554 rooms, Atlanta with 21 hotels and 2,925 rooms, Orlando with 19 hotels and 2,908 rooms, Houston with 16 hotels and 2,166 rooms and Nashville with 16 hotels and 2,116 rooms. In Q3, alone, the top 50 markets in the U.S. saw 98 hotels and 15,454 rooms open. The U.S. had 189 hotels and 25,995 rooms total open in the third quarter.

In 2021, New York City is forecasted to open 51 new hotels and 7,074 rooms, Atlanta follows with 25 hotels and 3,499 rooms, then Nashville with 23 hotels and 3,011 rooms, Houston with 23 hotels and 2,787 rooms, and Orlando with 21 hotels and 3,393 rooms. U.S. supply growth is forecasted to be 2 percent in 2021 and is expected to remain the same into 2022.