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The U.S. Hotel Construction Pipeline Continues To Grow In The First Quarter As The Economy Shows Surprising Strength

Thursday, May 09, 2019
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PORTSMOUTH, NH--At the end of the first quarter of 2019, analysts at Lodging Econometrics (LE) reported that the total U.S. construction pipeline continued to expand with 5,647 projects/687,941 rooms, up a strong 7% by projects and 8% by rooms year-over-year (YOY).
Pipeline totals are a mere 236 projects, or 4%, shy of the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008. The record should be pierced later in the year. Conversions and renovations are already at record levels.

Projects currently under construction stand at 1,709 projects/227,924 rooms with projects scheduled to start construction in the next 12 months at 2,429 projects/281,395 rooms. Projects in the early planning stage stand at 1,509 projects/178,622 rooms.

The upscale, upper-midscale, and midscale chain scales, all reached record-highs for both projects and rooms. Sixty-six percent of projects in the total pipeline are concentrated in two chain scales: upscale and upper midscale.

Annualized construction starts are at the highest level since 2008. In 2019, LE forecasts a 2.2% supply growth rate with 1,038 new hotels/118,385 rooms expected to open. For 2020, LE anticipates 1,174 new hotel openings and 128,598 rooms.

Hotel operations had a good quarter but mostly from expense improvements. Only 7 of the top 25 markets showed occupancy increases, quarter-over-quarter (QOQ). Only 11 markets had rev-par increases. Overall, U.S. demand growth was up 2.4% while supply was up 2%.
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