Hotel Construction Pipeline Closed 2018 With Steady Growth
Portsmouth, NH, January 31, 2019-At the end of 2018, analysts at Lodging Econometrics (LE) reported that the total U.S. construction pipeline continued to trend upward with 5,530 projects/669,456 rooms, both up a strong 7% year-over-year (YOY). However, pipeline totals continue to trail the all-time high of 5,883 projects/785,547 rooms reached in the second quarter of 2008.
Project counts in the early planning stage continue to rise reaching an all-time high of 1,723 projects/199,326 rooms, up 14% by projects and 12% by rooms YOY. Projects scheduled to start construction in the next 12 months stand at 2,153 projects/255,083 rooms. Projects currently under construction are at 1,654 projects/215,047 rooms, the highest counts since early 2008.
Also noteworthy at year-end, the upscale, upper-midscale, and midscale categories are at record-highs, for both rooms and projects. Luxury room counts and upper-upscale project counts are also at record levels.
In 2018, the U.S. had 947 new hotels/112,050 rooms open, a 2% growth in new supply, bringing the total U.S. census to 56,909 hotels/5,381,090 rooms. The LE forecast for new hotel openings in 2019 anticipates a 2.2% supply growth rate with 1,022 new hotels/116,357 rooms expected to open. The pace for new hotel openings has slowed slightly because of construction delays largely caused by shortages in skilled labor.
Lending at attractive rates is still accessible to developers, but lenders are growing more selective as we move deeper into the existing cycle.
The pipeline has completed its seventh consecutive year of growth. Moving forward the growth rate is expected to slow as the economies of most countries, including the United States, more firmly settle into the “new normal" marked by slow growth and low inflation.