Hospitality Market Shows Early Signs of Recovery
Portsmouth, NH, July 27, 2021-According to analysts at Lodging Econometrics (LE), at the end of the Q2 2021, the total U.S. construction pipeline stood at 4,787 projects and 598,111 rooms, down 14% YOY from 5,582 projects and 687,801 rooms in Q2 2020. According to LE, the decline “is largely a result of projects that were delayed in the under construction phase of the pipeline as a result of Covid, now having exited the pipeline and opened.”
During the first half of this year, the U.S. opened 472 new hotels with 59,034 rooms, and LE is forecasting another 450 projects/51,754 rooms to open during 2021 for a total of 922 projects/110,788 rooms by year-end, representing a 2% increase in new supply for 2021. For 2022, 1,008 projects/113,871 rooms are expected to open, representing another 2% increase in new supply. And for 2023, LE anticipates 997 projects/115,271 rooms to open, with another 2% gain.
According to LE, the arrival of summer, rebounding demand for domestic business and leisure travel, and the recent pledge from the U.S. Department of Commerce to invest $750 million in travel and tourism has investors and developers feeling increasingly optimistic, reflected in a 20% increase in new project announcements in Q2 2021 compared to the second quarter of 2020 when 169 projects/20,359 rooms were recorded.
Projects currently under construction stand at 1,165 projects/159,581 rooms, and projects scheduled to start construction in the next 12 months total 1,843 projects/213,744 rooms. Projects in the early planning stage saw a 25% increase in projects and a 28% increase in rooms YOY, standing at 1,779 projects/224,786 rooms, reflecting a combination of developer’s confidence to initiate new construction projects and the recalibration of some timelines for existing projects.