The U.S. hotel construction industry continues its robust growth trajectory, achieving record highs in the second quarter of 2024. According to a report by Lodging Econometrics, the total hotel construction pipeline now stands at 6,095 projects, encompassing 713,151 rooms. This represents an annual increase of 9% in projects and 8% in rooms. Sequential growth also remains positive, with a 0.5% increase in projects over the previous quarter.
Extended stay hotels and the upper midscale segment have emerged as significant drivers in this growth, reflecting ongoing demand in these categories. Dallas maintains its position as the leading market, boasting the largest number of hotel construction projects. The city leads not only in overall project count but also in the number of projects scheduled to start within the next 12 months and those in the early planning stages. Following Dallas are Atlanta, Inland Empire, Nashville, and Phoenix, all showing substantial project counts.
Key players in the hotel industry, including Marriott International, Hyatt, and Wyndham Hotels & Resorts, are actively expanding their midscale and upper midscale extended stay offerings. Marriott has initiated the construction of its first Studio Res hotel, while Hyatt is progressing with its Hyatt Studios brand, and Wyndham recently opened its first Echo Suites extended stay hotel. These developments reflect a strategic focus on the lucrative midscale segment.
The outlook for 2024 remains optimistic, with Lodging Econometrics forecasting the opening of 400 new hotels by year-end. This anticipated growth surpasses the 2023 total of 480 new hotels. Significant expansion is also projected for the coming years, with 779 hotel openings expected in 2025 and 928 in 2026, indicating a 1.8% increase in new supply.
Among the major projects slated for future completion is the VAI Resort in the Phoenix metropolitan area, a $1 billion development set to open in 2025. This project exemplifies the scale and ambition driving the U.S. hotel construction industry forward.
Overall, the sustained growth in the hotel construction pipeline highlights the industry's resilience and adaptability, with extended stay and midscale segments leading the charge in meeting evolving consumer preferences.
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