At the close of 2019, analysts at Lodging Econometrics (LE) report that the top five U.S. markets with the largest total hotel construction pipelines are: Los Angeles, at a cyclical high, with 168 projects/28,501 rooms; Dallas with 160 projects/19,787 rooms; New York City with 158 projects/25,825 rooms; Atlanta, also at a cyclical high, with 143 projects/19,660 rooms; and Houston with 136 projects/14,114 rooms.
Under construction project counts are at an all-time high with 1,768 projects with 237,362 rooms. Markets with the greatest number of projects already in the ground are New York with 107 projects/17,268 rooms, Dallas with 47 projects/5,894 rooms, Los Angeles with 46 projects/7,064 rooms, Atlanta with 46 projects/5,643 rooms, and Nashville with 37 projects/6,634 rooms. These five markets collectively account for 16% of the total number of projects currently under construction in the U.S.
In the fourth quarter, Denver had the highest number of new projects announced into the pipeline with 19 projects/2,372 rooms. Following Denver is Atlanta with 18 projects/2,613 rooms, Phoenix with 14 projects/1,907 rooms, Orlando with 14 projects/1,855 rooms, and then Dallas with 13 projects/1,467 rooms.
Reflecting the strong cyclical highs in the pipeline, LE’s forecast for new hotel openings in the U.S. will continue to rise in 2020 and 2021, having a 2.3% and 2.4% growth rate, respectively. In 2020, the markets topping the forecast are New York City with 66 new hotels expected to open/8,424 rooms, Dallas with 34 projects/4,073 rooms, Atlanta with 27 projects/3,162 rooms, Houston with 27 projects/2,585 rooms, and Nashville with 23 projects/3,001 rooms. In the 2021 forecast, Dallas tops the list with the highest number of new hotels expected to open with 39 projects/4,381 rooms followed by Houston with 34 projects/3,313 rooms and New York City with 33 projects/5,680 rooms.
An important trend to monitor moving forward are markets with large pipelines as compared to their existing supply of open and operating hotels. These markets are likely to see the fastest supply growth and largest supply-demand variances over the next few years. At the end of 2019, there are 15 of the top 25 markets with total pipelines in excess of 15% of their current census. Nashville tops this list of markets at 34%, followed by Los Angeles, Detroit, Miami, Dallas, and New York.
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