According to the "Q1 2022 Construction Pipeline Trend Report" for the United States from Lodging Econometrics, the total U.S. construction pipeline stood at 5,090 hotels with 606,302 rooms at the end of the first quarter of 2022. LE analysts report that the total U.S. construction pipeline showed a small increase year over year, up 2 percent by projects, but down 3 percent by rooms.
As of the end of the quarter, there were 961 hotels with 128,784 rooms currently under construction, down 27 percent by projects and 28 percent by rooms year over year. Projects scheduled to start in the next 12 months, at 1,911 hotels with 223,030 rooms, were up 2 percent by projects and 3 percent by rooms year over year. Projects and rooms in early planning reached a record high in the first quarter, standing at 2,218 hotels with 254,488 rooms, up 24 percent by projects and 12 percent by rooms year over year.
Leading Segments
The upscale and upper-midscale chain scales dominate the pipeline in Q1 with 63 percent of projects in the total pipeline concentrated in these two chain scales,. This has been the case for several years. Also of note is that there were a total of 1,420 hotels with 184,692 rooms in the renovation or conversion pipeline in the U.S. during the first quarter, and project conversions and room conversions reached an all-time high, increasing 59 percent by projects and 48 percent by rooms year over year.
New projects and development planning that previously were on hold are now getting the green light from investors and developers with buoyed confidence thanks to rather robust domestic leisure travel during the first part of the year, according to LE. With stronger domestic leisure travel in the U.S., along with the albeit slower revival of corporate and group travel, there is growing confidence in the recovery. Developers are eager to move forward with plans and break ground as this upward trend in hotel business demand is expected to continue throughout 2022.
Through year-end 2021, the U.S. opened 826 projects accounting for 106,192 rooms. A total of 113 hotels with 12,464 rooms opened in the first quarter of 2022. Over half of these opens, 68 hotels with 7,154 rooms, were in suburban locations, but 41 hotels with 4,703 rooms of newly opened hotels, or 36 percent, were in a top 25 market.
Reflecting the increasing number of projects in early planning and projects scheduled to start in the next 12 months, LE’s forecast for new hotel openings by projects has risen slightly for 2023. For the remainder of the year, LE forecasts another 649 hotels with 77,568 rooms to open for a total of 762 hotels with 90,032 rooms in 2022, representing a 1.6 percent increase in new hotel supply. In 2023, LE forecasts an additional 839 hotels with 93,169 rooms will open in the U.S., for a 1.6 percent supply increase.