Hospitality Construction Pipeline Closed 2021 Down 8%
Portsmouth, NH, January 24, 2022--At the fourth quarter close of 2021, the total U.S. construction pipeline stands at 4,814 projects/581,953 rooms, down 8% by projects and 10% by rooms year-over-year (YOY), reports analysts from Lodging Econometrics.
While project totals have dipped slightly YOY, the number of projects in the early planning stage continues to rise. In the final quarter of 2021, projects in the early planning stage experienced an 18% increase by projects and 11% by rooms YOY, for a total of 2,021 projects/239,816 rooms.
Projects scheduled to start construction in the next 12 months stand at 1,821 projects/210,890 rooms at the end of the fourth quarter. Projects under construction finished the year at 972 projects/131,247 rooms. New project announcements are down in the fourth quarter; however, developers are eager to accelerate projects long-delayed by the Covid-19 pandemic. Unfortunately, they face some development roadblocks, including escalating inflation and supply chain shortages, that are causing higher prices versus “pre-pandemic” costs for labor and materials. These factors continue to prolong hotel development timelines. We anticipate these challenges to abate throughout the year and see construction starts to moderately improve.
Nevertheless, the hotel industry has found some assurance in the recent resurgence of travel demand and the steady increase in hotel booking numbers over recent months. Pandemic exhaustion and pent-up demand for “get-aways” have led to a growing number of Americans becoming more open to travel. In addition to leisure travel, the business sector has a strong desire to travel and meet in person. LE analysts are expecting higher attendance at industry conferences and events after Q1‘22. This will help to raise hotel business demand and positively impact the industry as a whole.
Through year-end 2021, the U.S. opened 823 projects accounting for 105,705 rooms, for a growth rate of 1.9%. For 2022, LE is forecasting 783 projects/90,074 rooms to open at a supply growth rate of 1.6%. In 2023, continuing at a supply growth rate of 1.6%, another 820 projects/93,112 rooms are anticipated to open by year-end.