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Lodging Econometrics Expects Hotel Supply Growth Through 2026
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The hotel construction pipeline just reached a record.
There were 6,095 hotel properties with 713,151 rooms in the pipeline at the end of the second quarter, according to Lodging Econometrics, Portsmouth, N.H. This represents a 9% year-over-year increase in projects and an 8% year-over-year increase in rooms compared to Q2 2023 totals, LE’s Q2 2024 U.S. Hotel Construction Pipeline Trend report said.
As the second quarter closed, there were 1,171 hotel projects totaling 147,611 rooms under construction, marking a 10% increase in projects and a 4% increase in rooms year-over-year. Projects slated to start construction in the next 12 months total 2,350 properties with 268,378 rooms, reflecting a 5% increase in projects and a 3% increase in rooms YOY.
Projects and room counts in the early planning stage increased by 13% and 15% year-over-year, respectively, ending the quarter at 2,574 projects and 297,162 rooms. LE said it expects that projects scheduled to start in the next 12 months will move to under construction rather quickly if interest rates begin to decline later this year.
Extended-stay brands remain popular with hotel developers, accounting for 36% of the total projects under construction, 33% of projects scheduled to begin within the next 12 months and 34% of projects in the early planning stage, the report said. Nearly two-thirds of the projects in the extended-stay pipeline are middle-tier brands.
According to LE analysts, 250 new hotels with 29,777 rooms opened in the U.S. during the first half of 2024. More than half of the hotels that opened in 2024 were upscale and upper-midscale properties. “These two chain scales are forecasted to have the highest growth rates through 2026,” the report said.