According to the Q2 2023 United States Construction Pipeline Trend Report by Lodging Econometrics (LE), the hotel construction pipeline in the U.S. remains robust, with a total of 5,572 projects and 660,061 rooms in progress. This represents a notable 7% year-over-year (YOY) increase in projects and a 6% YOY increase in rooms.
Despite facing some short-term challenges, developers and franchise companies have demonstrated resilience and confidence in the long-term prospects of the economy. Factors such as inflation, higher interest rates, and an overall cautious approach have influenced the market in recent months. However, the sustained growth in the hotel construction pipeline reflects developers’ unwavering belief in the strength of the economy.
Notably, the total pipeline is only 5% away from its all-time peak in terms of projects, indicating the significant potential for further expansion in the industry. While challenges persist, hotel developers are actively securing prime locations for future development, both in the present and the upcoming months.
A positive aspect for both the economy and the hotel industry is the surge in consumer confidence, leading to strong demand for guest rooms. This upward trend in demand is expected to continue throughout the summer and into the fall. With a heavy influx of tourists in August and the commencement of the fall conference season after Labor Day, the hospitality sector anticipates sustained growth in the coming months.
The report also highlights the progress of projects currently under construction, experiencing a moderate quarter-over-quarter (QOQ) growth over the past year. As of the end of Q2, there are 1,062 projects under construction, amounting to 141,681 rooms. This reflects a significant 10% and 8% YOY increase in projects and rooms, respectively. Moreover, there has been an 11% YOY increase in projects scheduled to start construction in the next 12 months, with 2,232 projects and 260,595 rooms poised for development at the close of the second quarter.