U.S. Hotel Pipeline Up 8.3%

The U.S. hotel pipeline continues its steady growth, reported STR, Hendersonville, Tenn.

STR counted 1,573 hotel projects accounting for 205,992 rooms in construction as of July. Rooms in the final phase of the development pipeline increased 8.3 percent year-over-year.

Construction activity has now increased year-over-year for 10 consecutive months as we move closer to the peak recorded in December of 2007, said STR Senior Vice President of Operations Bobby Bowers, noting the 2007 peak totaled 211,000 rooms. He said hotel pipeline growth has been gradual on the national level, “[but] there are definitely markets that have seen a more rapid acceleration in comparison with their existing supply and subsequent pressure on performance has been evident,” he said.

Most of the current construction activity is in the upper-midscale and upscale segments, though upper-upscale projects represented the largest percentage increase in activity year-over-year, STR reported. Several markets reported more than 6,000 rooms under construction between new construction, expansion, renovation and conversion projects. The country’s largest hotel market, New York, led with 14,755 rooms under construction, which equaled nearly 12 percent of New York’s existing supply, followed by Las Vegas with 8,878 rooms under construction, 5.3 percent of existing supply. Orlando, Fla., currently has 7,297 rooms in the construction phase, or 5.7 percent of the city’s current supply.

Lodging Econometrics, Portsmouth, N.H., said the companies with the most hotel properties underway include Marriott International with 1,469 projects with 193,458 rooms in construction. Hilton Worldwide has 1,372 projects with 152,853 rooms underway, down slightly from last quarter’s record high for the firm. InterContinental Hotels Group ranked third with 962 projects and 97,647 rooms underway.

“In the first half of 2019, 70 percent of the new hotels that opened in the U.S. belonged to Marriott, Hilton or IHG,” Lodging Econometrics’ Pipeline Report said. In 2021, Marriott could open 328 new hotels, IHG could open 284 and Hilton could open 268 new properties. “Should all these hotels come to fruition, these three companies will continue their dominance opening 73 percent of all the new hotels in 2021,” the report said.

JLL, Chicago, said the U.S. hotel sector registered a 28 percent decline in transaction volumes over the first six months of 2019 compared to first-half 2018. “This was largely due to the lack of portfolio opportunities in the market, with single-asset transaction volumes consistent with last year’s level,” the JLL Global Hotel Market Perspective report said. “The outlook for the U.S. remains positive and activity is expected to pick up in the second half of the year, with a number of high-profile deals closing in the next few months.”