LE: U.S. pipeline nears historic high, new project announcements decline

The U.S. hotel construction pipeline is 230 projects short of the all-time high of 5,883 from Q2 2008. Photo credit: lamontak590623 / iStock / Getty Images Plus

The latest data from Lodging Econometrics shows the total U.S. pipeline reached 5,653 projects in Q2, just 230 projects shy of the all-time high of 5,883 from Q2 2008. The number represents a 6 percent rise in projects year over year, with a rooms pipeline up 9 percent YOY to 693,207, but 92,340 fewer rooms than reached in Q2 2008. 

Projects currently under construction stand at 1,727 projects (233,600 rooms) with projects scheduled to start construction in the next 12 months at 2,552 projects (295,989 rooms). Both are at their highest levels since early 2008. Those in the early planning stage total 1,374 projects (163,618 rooms).

The industry opened 456 new hotels with 53,427 rooms in first half, and an additional 599 projects with 66,300 rooms are slated to open by year's end.  Lodging Econometrics forecasted new hotel openings to continue to rise in 2020 with 1,161 new hotels and 129,531 rooms scheduled to open, with 1,206 new hotels with 139,793 rooms to open the following year based on the current pipeline. If all open, 2021 will register the highest count of new hotel openings since 2009.

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Lodging Econometrics predicted the pipeline is in a “topping-out formation,” with the quarter’s 359 project announcements representing the lowest count since Q4 2014. Brand-to-brand conversions, at their lowest level since the end of 2016, also are in decline.

Lodging Econometrics attributed these declines to decreases in business spending, which has turned negative for the first time since early 2016. It said these declines are due largely to the uncertainty caused by trade and tariff problems and the slowing global economy.

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