Home / Innovation / LE: Pandemic barely slows U.S. hotel construction

LE: Pandemic barely slows U.S. hotel construction

At the close of the second quarter of 2020, the total U.S. hotel construction pipeline stands at 5,582 projects and 687,801 rooms, down just 1 percent by hotels and rooms year-over-year, according to the latest report from analysts at Lodging Econometrics. 

Despite some project cancellations, postponements and delays, there has been minimal impact on the U.S. construction pipeline. Contrary to what is being experienced with hotel operations, the report said, the pipeline remains robust as interest rates are at all-time lows. 

Click here for all of Hotel Management’s COVID-19 coverage

Projects currently under construction stand at 1,771 hotels with 235,467 rooms, up 3 percent and 1 percent respectively, year over year. Projects scheduled to start construction in the next 12 months total 2,389 hotels and 276,247 rooms. Projects in the early planning stage stand at 1,422 hotels and 176,087 rooms. 

Virtual Roundtable

Post COVID-19: The New Guest Experience

Join Hotel Management’s Elaine Simon for our latest roundtable—Post COVID-19: The New Guest Experience. The experts on the panel will share how to inspire guest confidence that hotels are safe and clean and how to win back guest business.

As expected, developers with projects under construction are still experiencing some opening delays. However, projects continue to move forward, albeit with extended timelines. As was the case at the end of the first quarter, developers with hotels scheduled to start construction in the next 12 months continue to monitor current events and make adjustments to their construction start and opening dates. 

Openings & Pipelines

In the first half of 2020, the U.S. opened 313 new hotels with 36,992 rooms. Additionally, there were 481 new hotels with 56,823 rooms announced into the pipeline in the first half of 2020. Of those totals, 169 new project announcements with 20,359 rooms occurred in the second quarter. 

With franchise development staff largely working from home, nonessential travel halted, and with the ongoing pandemic, new development deal signings have slowed. This has resulted in a 53 percent decrease in new project announcements compared to the second quarter of 2019 when 359 hotels with 44,895 rooms were recorded. 

With the arrival of summer, the country has begun to see an uptick in domestic leisure travel. As a result, more hotels are re-opening, and many others have begun to move up renovation plans and/or are repositioning their property with a brand conversion. In the first half of 2020, LE recorded 1,465 active renovation projects affecting 314,043 rooms and 1,196 active conversion projects for 136,110 rooms throughout the U.S.

Top Markets

Despite the impact COVID-19 has had on operating performance, development in the lodging industry continues. In the first half of 2020, Dallas recorded the highest count of new projects announced into the pipeline with 18 hotels and 2,018 rooms. Washington, D.C. followed with 14 hotels and 1,978 rooms, then Phoenix with 13 hotels and 1,397 rooms, Miami with 10 hotels and 2,472 rooms and the Florida Panhandle with 9 hotels and 1,178 rooms. 

As of the close of H1, LE’s top five U.S. markets with the largest total hotel construction pipelines were Los Angeles, leading for the fourth consecutive quarter with 163 projects and 27,415 rooms; followed by Dallas with 158 hotels and 19,314 rooms; New York City with 151 hotels and 26,302 rooms; Atlanta with 135 hotels and 18,634 rooms; and Houston with 122 hotels 12,486 rooms. 

Despite these top five markets being located in states that have been hit hard by COVID-19, combined, they still account for 15 percent of the rooms in the total U.S. pipeline and, with the exception of Houston, have pipelines that remain steady and primarily unchanged quarter-over-quarter. 

New York City continues to have the greatest number of projects under construction, with 106 hotels and 18,354 rooms underway. Los Angeles follows with 48 hotels and 8,070 rooms, and then Atlanta with 48 hotels 6,604 rooms, Dallas with 46 hotels and 5,344 rooms, and Nashville with 37 hotels and 6,597 rooms. These five markets collectively account for nearly 20 percent of the total number of rooms currently under construction in the U.S. 

Time to Upgrade

According to LE’s research, many hotel owners who have capital on hand are taking this opportunity of decreased demand to upgrade and renovate their hotels or redefine their hotels with a brand conversion. In the second quarter of 2020, LE recorded a combined renovation and conversion total of 1,276 active projects with 217,865 rooms for the U.S. The markets with the largest combined number of renovations and conversions are Chicago with 28 hotels and 4,717 rooms; Los Angeles with 26 hotels and 4,548 rooms; New York City with 22 hotels and 8,817 rooms; Washington, D.C., with 21 hotels and 4,850 rooms; and Atlanta with 19 hotels and 3,273 rooms.

Check Also

Discussion of Hospitality Technology Across the Atlantic – By Carl Weldon, HFTP COO Europe

Cyber HITEC featured a new virtual session this year that built a bridge across the …