US hotel pipeline shrinks, but future looks brighter

The number of U.S. hotel construction projects in the development pipeline at the end of 2021 was about 8 percent lower than a year earlier, according to a new report from Lodging Econometrics, but projects in the early stages of development increased. But what appears to be a subdued demand from developers for construction is being hampered by inflation and supply chain problems, the report said.

The total US hotel construction pipeline in the fourth quarter was 4,814 projects, representing approximately 582,000 rooms, a 10 percent year-over-year decline. However, projects in the early stages of development were up 18 percent, representing an 11 percent increase in rooms.

Lodging Econometrics attributed the surge in early-stage interest to developers’ eagerness “to accelerate projects long delayed by the Covid-19 pandemic”, especially given “the recent resurgence in travel demand and the steady increase in hotel bookings in recent months.” The company expects business travel and live meeting attendance to increase in 2022, further encouraging developers.

But those plans are being hampered by what the company called “escalating inflation and supply chain shortages, driving higher prices relative to pre-pandemic costs for labor and materials.” Still, Lodging Econometrics expects “these challenges will diminish throughout the year and [to] see construction begins to improve moderately.”

Marriott leads chains

Marriott International had more U.S. projects under construction than any other hotel company, with 1,345 projects representing approximately 171,000 rooms under development. Hilton Worldwide had 1,239 projects with approximately 141,000 rooms under construction and IHG Hotels & Resorts had 761 projects with approximately 77,000 rooms.

Hilton’s Home2 Suites led all individual brands with 421 projects in development, totaling approximately 44,000 rooms, followed by IHG’s Holiday Inn Express (288 projects with approximately 27,600 rooms) and Marriott’s Fairfield Inn (247 projects with approximately 23,300 rooms).

Lodging Econometrics also named Marriott’s TownePlace Suites and Residence Inn, Hilton’s Tru and Hampton, and IHG’s Avid and Staybridge Suites as brands most represented in the US development pipeline.

Dallas Top City

By the end of 2021, Dallas had more projects in the pipeline than any other US location, with 152 projects planned for a total of approximately 18,200 rooms. Dallas was followed by Atlanta (133 projects with approximately 17,600 rooms), New York City (121 projects with approximately 19,300 rooms), Los Angeles (120 projects with approximately 19,800 rooms) and Houston (91 projects with approximately 9,900 rooms).

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