US hotel construction pipeline grows to new highs

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For another consecutive quarter, the total U.S. hotel construction pipeline grew to new highs. 

In the second quarter of 2024, the total hotel pipeline reached a record 6,095 projects, or 713,151 rooms, growing 9% and 8% year over year, respectively, according to a trends report by Lodging Econometrics. Sequentially, projects in the pipeline increased 0.5% in the quarter. 

Compared to the prior year, projects presently under construction in the quarter increased 10%, while projects slated to start construction in the next 12 months were up 5%. Projects in the early planning stage, meanwhile, increased by 13% year over year in the quarter. 

Extended stay remained “popular” among developers in Q2, and the upper midscale and upscale segments led others by project count, the report found. Additionally, Dallas again topped other U.S. markets for the largest hotel construction pipeline. 

Looking toward the second half of 2024, Lodging Econometrics predicts another 400 hotels will open, bringing the year’s total openings well above 2023 levels. 

Dallas leads again

Dallas led all other U.S. markets for the largest hotel construction pipeline in Q2, with 189 projects, four projects shy of its record-high at the end of Q4 2023, according to the report. The market held onto its lead from Q1, when it also had the largest hotel construction pipeline. 

Atlanta followed with a record-high 159 projects, or 18,522 rooms. Inland Empire, California, came next with a record-high 124 projects; then Nashville with 123 projects; and Phoenix with 120 projects. 

In the second quarter, Dallas also led with the most projects scheduled to start in the next 12 months (73) and the most hotel projects in the early planning stage (86). 

New York beat out Dallas for the most hotel projects presently under construction in the quarter. New York had 46 projects under construction, or 7,572 rooms, while Dallas had 30 projects, or 3,523 rooms. 

As for new projects announced during the quarter, Atlanta saw the largest number, with 10 projects, or 1,140 rooms. Dallas followed closely behind, also with 10 projects, but slightly fewer rooms at 1,051. Miami, Indianapolis and New Orleans followed after that. 

Extended stay, upper midscale dominate

Across all markets, extended stay remained a priority for developers in Q2. The category accounted for 36% of the total projects under construction, 33% of projects scheduled to begin within the next 12 months and 34% of projects in the early planning stage. Some 64% of the projects in the extended stay pipeline were for middle-tier brands, according to Lodging Econometrics.

Several major hotel companies are expanding in midscale, including Marriott International, which broke ground on its inaugural Studio Res hotel earlier this year. Marriott first launched the brand in June 2023, entering the U.S. midscale extended stay segment.

Hyatt, meanwhile, is underway on the first hotel for its upper midscale extended stay brand, Hyatt Studios. And Wyndham Hotels & Resorts opened its first Echo Suites extended stay hotel earlier this month, with plans to significantly scale the brand. 

Lodging Econometrics found that the upper midscale chain scale led all other segments in the total pipeline for the largest project count, with 2,262 projects, or 219,547 rooms. The upscale segment followed, with 1,417 projects in the pipeline, or 175,343 rooms. Together, the upscale and upper midscale segments comprised 60% of all projects in the total pipeline, according to the report.

One hotel company strategically expanding in upscale is Choice Hotels International. In the second quarter, Choice continued its segment push with a Cambria opening. 

Openings overview

Over half of the hotels that have already opened in 2024 are upscale and upper midscale, according to Lodging Econometrics, which forecasts that the two segments will have the highest growth rates through 2026.

In the first half of this year, 250 hotels with 29,777 rooms opened across the U.S., the report found. 

Lodging Econometrics anticipates an additional 400 projects, or 44,451 rooms, will open through the remainder of 2024, bringing the year’s openings total to 650 hotels with 74,228 rooms. 

New York City is expected to open the most hotels (23) by year-end, followed by Dallas (16), Atlanta (15), Inland Empire (14) and Orlando (13). 

The year-end 2024 forecast represents a 35% increase above the number of hotel openings in 2023, which stood at 480 hotels, or 60,922 rooms, according to the report. 

Looking ahead, Lodging Econometrics analysts forecast there will be 779 U.S. hotel openings in 2025 and 928 openings in 2026, representing a 1.8% increase in new supply. 

One major project slated to open in 2025 is the $1 billion VAI Resort in the Phoenix metropolitan area.

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