Dive brief:
- According to a report by Lodging Econometrics, the global hotel construction pipeline reached the highest number of projects on record during the fourth quarter of 2023. The global backlog reached 15,196 projects, or 2.37 million rooms, during the quarter, up 7% for projects and 3% for rooms year on year.
- The United States led all other countries with the largest hotel construction portfolio in the world, achieving a record 5,964 projects, or 693,963 rooms. China followed the US, reaching its all-time high of 3,788 projects, or 691,772 rooms.
- Dallas and Atlanta led other global markets with the largest hotel construction pipelines. Lodging Econometrics previously forecast continued portfolio growth in US markets in 2024, bolstered by “less expensive borrowing costs” that will provide “long-awaited relief from interest rates”.
Diving knowledge:
The number of hotels under construction worldwide rose 2% year-on-year in the fourth quarter to 6,160 projects, or 1.1 million rooms, according to Lodging Econometrics.
The number of projects expected to start construction in the next 12 months also increased by 7% year-on-year during the quarter, reaching 3,850 projects, or 536,588 rooms. Projects and rooms in the early planning stage reached all-time highs of 5,186 projects, or 734,391 rooms, up 12% and 6% year-on-year, respectively.
In addition, renovation and conversion projects remained desirable, with the highest-ever global backlog reaching 3,291 projects, or 510,584 rooms, in the fourth quarter. For several major hotel companies, conversions drove portfolio growth during the quarter.
The United States led all other countries with the largest hotel construction pipeline and also boasted three of the five cities, globally, with the largest pipeline totals in the fourth quarter: Dallas, with 193 projects or 22,291 rooms; Atlanta, with 151 projects, or 18,730 rooms; and Nashville, with 123 projects, or 16,148 rooms. Chengdu, China also ranked among the top five cities.
Local hospitality experts from Dallas and Atlanta previously told Hotel Dive that the cities’ pipeline growth has been bolstered by increased demand for travel, including corporate and group travel.
In a January statement, Lodging Econometrics said the Federal Reserve’s recent signaling of interest rate cuts in 2024 and additional cuts in 2025 sends “a positive but cautious outlook for U.S. hotel development in the year it comes”.
Potential rate cuts are expected to have “a favorable impact not only on new construction, but also on acquisitions, renovations and conversions,” Lodging Econometrics said in January, adding that loan volumes will slowly increase during the first half of 2024 and will gradually increase. the pace of the second half of the year.
