Q1 construction pipeline continues YOY growth

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In the first quarter of 2020, the U.S. opened 144 new hotels with 16,305 rooms. Photo credit: Pixabay

The total U.S. construction pipeline continued to expand year-over-year to 5,731 projects/706,128 rooms, up 1 percent by projects and 3 percent by rooms at the end of the first quarter, according to analysts at Lodging Econometrics. However, quarter over quarter, the pipeline has contracted slightly less than 1 percent by both project and room counts, down from 5,748 projects/708,898 rooms at the close of 2019.

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Projects currently under construction stand at an all-time high of 1,819 projects/243,100 rooms. Projects scheduled to start construction in the next 12 months total 2,284 projects/264,286 rooms, while projects in the early planning stage stand at 1,628 projects/198,742 rooms. Projects in the early planning stage are up 8 percent by projects and 11 percent by rooms, YOY.

The top five U.S. markets with the largest total hotel construction pipelines at the close of the first quarter are: Los Angeles with 166 projects/27,752 rooms; Dallas with 164 projects/19,999 rooms; New York City with 152 projects/26,111 rooms; Atlanta with 143 projects/19,423 rooms; and Houston with 132 projects/13,316 rooms. 

Markets with the greatest number of projects already in the ground are led by New York City with 108 projects/18,434 rooms. Atlanta follows with 48 projects/6,002 rooms, and then Dallas with 46 projects/5,603 rooms, Los Angeles with 43 projects/6,851 rooms, and Orlando with 39 projects/9,394 rooms. Collectively, these five markets account for 16 percent of the total number of projects currently under construction in the U.S. 

In the first quarter, Dallas had the highest number of new projects announced into the pipeline with 13 projects/1,461 rooms. Washington, D.C., follows with 8 projects/1,145 rooms, then Phoenix with 8 projects/904 rooms, Los Angeles with 7 projects/1,103 rooms, and Atlanta with 7 projects/774 rooms. 

Developers with projects under construction have generally extended their opening dates by two to four months. For projects scheduled to start construction in the next 12 months, on average, developers have adjusted their construction start and opening dates outwards by four to six months. Additionally, brands have been empathetic with developers by relaxing timelines as everyone adjusts to the COVID-19 interruptions. As a result, LE anticipates a stronger count of openings in the second half of 2020, compared to the first half.

In the first quarter of 2020, the U.S. opened 144 new hotels with 16,305 rooms. While the COVID-19 pandemic has slowed development, it has not completely stalled it. There were still 312 new projects with 36,464 rooms announced into the pipeline in the first quarter.

Many open or temporarily closed hotels have already begun or are in the planning stages of renovating and repositioning their assets while occupancy is low or nonexistent. At the close of the first quarter, LE recorded 769 active renovation projects/163,030 rooms and 616 active conversion projects/69,258 rooms throughout the United States. The markets with the largest count of renovation and conversion projects combined are Chicago with 32 projects/5,565 rooms, Washington, D.C., with 26 projects/5,491 rooms, Los Angeles with 26 projects/4,271 rooms, New York City with 21 projects/8,151 rooms and San Diego with 21 projects/4,456 rooms.