- By the end of Q4, the US hotel construction pipeline included a record 6.38K projects and nearly 747K rooms, with 8% room growth compared to 2023.
- 2.97K projects were in the early planning stages, 2.26K were scheduled to begin construction in the next 12 months, and 1.15K were under construction.
- Renovation projects fell slightly, while conversions reached an all-time high with 1.34K projects, contributing to 255.8K rooms.
- The upper midscale segment led the pipeline, with 2.35K projects and 227.8K rooms, followed by upscale and midscale segments.
The US hotel construction pipeline reached new milestones at the close of 2024, with nearly 750K hotel rooms in the works, signaling a strong outlook for hospitality, as reported by The Construction Broadsheet.
According to Lodging Econometrics, this growth is fueled by a surge in early-stage planning, conversions, and a steady demand for renovations, positioning the hotel market for continued growth in 2025.
Breaking Records
As of Q4, the total number of hotel projects in the US stood at 6.4K, up 7% in terms of the number of projects and up 8% in terms of the number of rooms compared to the same period in 2023. The robust pipeline includes a wide range of hotel types at various stages of development.
LE’s report highlights the significant activity at each stage of the pipeline:
- Early Planning: A record 2.97K projects with 345.6K rooms were in the early planning phase, up 15% in projects and up 19% in room count YoY.
- Scheduled Construction: 2.26K projects (259.1K rooms) are set to begin construction in the next 12 months, further solidifying the pipeline.
- Under Construction: There were 1.15K projects with 142.24K rooms under construction, a clear indicator of the sector’s continued expansion.
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Renovations, Conversions
While the number of renovation projects declined slightly, standing at 661 projects and 127K rooms, the number of brand conversions reached an all-time high.
There were 1.34K conversions with 128.74K rooms, contributing to a total of nearly 2K renovation and conversion projects with 255.82K rooms.
Leading The Way
Among the different hotel segments, the upper midscale category led with 2.35K projects and 227.85K rooms, followed by upscale hotels with 1.47K projects and 182.47K rooms.
The midscale and upper upscale segments also hit significant milestones, reflecting growing demand across various price points in the hotel market.
Favorable Factors
According to a November 2024 PwC report, recent Fed rate cuts and lower inflation could create a more favorable financing landscape, potentially boosting hotel construction starts this year.
Additionally, business travel is on the rise, and post-pandemic international travel recovery is expected to boost demand for hotel rooms.
However, a slowdown in consumer spending and GDP growth could lead to more subdued numbers.
Looking Ahead
While external factors like political uncertainty, changing immigration policies, and evolving travel patterns may introduce some unpredictability, the sector’s strong fundamentals—combined with favorable financing conditions—suggest hotel construction will remain robust in the year ahead.
While there are certainly some headwinds pushing back, the industry’s growth trajectory remains positive as we move into 2025.s are expected to remain tight, with potential relief through concessions as landlords adjust to changing demand.
