LE: Record Q1 development growth for U.S. hotels

U.S. hotel construction development is at an all-time high in the first quarter of 2024, according to the Q1 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics. At the end of the first quarter, there are 6,065 hotels with 702,990 rooms in the pipeline. The all-time high represents a 9 percent year-over-year increase in hotels and a 7 percent YOY increase in rooms compared to last year.

The details can be seen directly within the stages of the pipeline, which all saw YOY growth in Q1. Presently, there are 1,144 hotels comprising 141,336 rooms under construction, marking a 9 percent increase in hotels and a 1 percent increase in rooms YOY. Hotels slated to start construction in the next 12 months total 2,259 hotels with 260,968 rooms, reflecting a 10 percent rise in hotels and an 8 percent increase in rooms YOY. Notably, both hotels and room counts in the early planning stage increased by 9 percent YOY, reaching record-high figures of 2,662 hotels and 300,686 rooms, respectively. 

Of all the projects in the pipeline, a little over half of them are concentrated within the upscale, upper-midscale, and midscale chain scales. In Q1, the upper midscale and midscale segments hit record-high hotels and room counts. The luxury chain scale also reached a record-high project total in Q1. 

The latest data from LE also highlights the dominance of extended-stay brands in the pipeline at Q1, a segment that developers have increasingly favored in recent years. These brands now account for 37 percent of the total hotels under construction, 41 percent of hotels scheduled to begin within the next 12 months and 39 percent of projects in the early planning stage. Sixty-three percent of the extended stay hotels in the pipeline are branded with brands within the middle-tier extended-stay segment. 

Renovation and brand conversion activities in the U.S. have also seen significant growth, reaching record-high combined totals of 2,041 hotels and 266,405 rooms. Brand conversions, in particular, have hit a new record-high of 1,235 projects with 114,680 rooms, growing 14 percent by hotels YOY, while announced renovations at Q1 stand at 806 hotels and 151,725 rooms. LE analysts anticipate this robust conversion and renovation activity to continue throughout 2024.

In terms of new hotel openings, the first quarter saw the opening of 114 new hotels with 15,506 rooms in the U.S. Over half of these opens, 72 hotels/8,269 rooms, were in suburban locations, and 60 hotels/10,036 rooms (or 53 percent/65 percent) of newly opened hotels were located within the top 50 markets. 

With a record number of projects in early planning and an increasing number of projects scheduled to start in the next 12 months, LE analysts project modest growth in new hotel openings through 2024. The LE forecast for the remainder of 2024 includes the opening of another 547 projects with 60,483 rooms, totaling 661 new hotels with 75,989 rooms and representing a 1.3 percent increase in new hotel supply by year-end. Looking ahead to 2025, LE analysts anticipate an additional 790 new hotels with 85,561 rooms to open in the U.S., resulting in a 1.5 percent supply increase.