Hotel Construction Pipeline Declined 7% in Projects in Q3

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Hotel Construction Pipeline Declined 7% in Projects in Q3

Portsmouth, NH, October 29, 2020-The total U.S. hotel construction pipeline, at the end of Q3 2020, stands at 5,282 projects/655,026 rooms, down 7% by projects and 6% by rooms, year-over-year (YOY), according to the latest U.S. Hotel Construction Pipeline Trend Report by Lodging Econometrics (LE). 

As expected, the hotel construction pipeline is off more substantially in Q3 '20 as compared to Q2 '20. This is due largely in part to an acceleration of new hotel openings in Q2 '20 as a result of a cyclical high number of projects under construction in Q1 '20 that were delayed and later opened in Q2 '20. Secondly, new project announcements continue to be muted. Projects exiting the pipeline and moving to a cancelled or on hold status in Q3 '20 stood at 191 projects/21,859 rooms.

Developers continue to closely monitor the impact the coronavirus will have on travel demand, how quickly a widespread vaccine will roll out, and the outcome of the U.S. presidential and congressional elections. It is expected that as these events and timelines provide more clarity for developers, they will begin to more confidently move forward with their development activity.

In addition, the franchise companies with the largest construction pipelines at the end of the third quarter of 2020 are Marriott International with 1,390 projects/184,450 rooms, followed by Hilton Worldwide with 1,351 projects/155,626 rooms, and InterContinental Hotels Group (IHG) with 873 projects/89,375 rooms, according to LE’s quarterly United States Construction Pipeline Trend Report. Combined these three companies account for 68% of the projects and 66% of the rooms in the total pipeline; roughly the same percentage it’s been quarter-over-quarter throughout 2020.

Hilton’s Home2 Suites and IHG’s Holiday Inn Express continue to have the largest U.S. pipelines with 402 projects/42,036 rooms and 348 projects/33,351 rooms, respectively. Hampton by Hilton follows with 291 projects/30,140 rooms, then Tru by Hilton with 280 projects/26,991, and Marriott’s Fairfield Inn with 277 projects/27,005 rooms.

Other notable brands in the pipeline for each of these franchise companies are Marriott’s Residence Inn with 198 projects/24,549 rooms, SpringHill Suites with 172 projects/19,594 rooms, and TownePlace Suites with 195 projects/19,616 rooms, and then IHG’s Avid Hotel with 185 projects/16,583 rooms.