For another consecutive quarter, the total U.S. hotel construction backlog grew to new highs.
In the second quarter of 2024, the total hotel portfolio reached a record 6,095 projects, or 713,151 rooms, with growth of 9% and 8% year-on-year, respectively, according to a trend report from Lodging Econometrics. Sequentially, projects in the backlog increased by 0.5% during the quarter.
Compared to the previous year, projects currently under construction during the quarter increased by 10%, while projects expected to begin construction in the next 12 months increased by 5%. Projects in the initial planning phase, on the other hand, increased by 13% year-on-year during the quarter.
By the numbers
6,095
North American hotel projects in total portfolio
+9%
Year-on-year growth of the hotel project in the USA
400
The US hotels will open in late 2024
The extended stay remained “popular” with developers in the second quarter, with the premium and high-end segments leading others in the number of projects, the report said. Additionally, Dallas once again led other US markets for the largest hotel construction pipeline.
Heading into the second half of 2024, Lodging Econometrics predicts that 400 more hotels will open, bringing the opening total for the year well above 2023 levels.
Dallas leads again
According to the report, Dallas led all other U.S. markets for the largest hotel construction pipeline in the second quarter, with 189 projects, four projects away from its record at the end of the fourth quarter of 2023. The market maintaining its lead from the first quarter, when it also had the largest hotel construction portfolio.
Atlanta followed with a record 159 projects, or 18,522 theaters. Inland Empire, California, was next with a record 124 projects; then Nashville with 123 projects; and Phoenix with 120 projects.
In the second quarter, Dallas also led with the most projects scheduled to break ground in the next 12 months (73) and the most hotel projects in the early planning stages (86).
New York surpassed Dallas for the most hotel projects under construction in the quarter. New York had 46 projects under construction, or 7,572 rooms, while Dallas had 30 projects, or 3,523 rooms.
In terms of new projects announced during the quarter, Atlanta saw the largest number, with 10 projects, or 1,140 rooms. Dallas followed closely behind, also with 10 projects, but slightly fewer rooms at 1,051. After that, Miami, Indianapolis and New Orleans followed.
Extended stay, dominates the upper middle scale
Across all markets, extended stay continued to be a priority for developers in the second quarter. The category represented 36% of total projects under construction, 33% of projects scheduled to begin in the next 12 months, and 34% of projects in the early planning stages. According to Lodging Econometrics, 64% of projects in the extended stay portfolio were for mid-tier brands.
Several major hotel companies are expanding into midscale, including Marriott International, which opened its inaugural Studio Res hotel earlier this year. Marriott first launched the brand in June 2023, entering the mid-range extended stay segment in the United States.
Hyatt, meanwhile, is underway on the first hotel in its upper-midscale extended-stay brand, Hyatt Studios. And Wyndham Hotels & Resorts opened its first Echo Suites extended-stay hotel earlier this month, with plans to significantly scale the brand.
Lodging Econometrics found that the upper-midscale chain led all other segments of the total portfolio for the most projects, with 2,262 projects or 219,547 rooms. The luxury segment followed, with 1,417 projects in the portfolio, or 175,343 rooms. Together, the high-end and upper-middle segments accounted for 60% of all projects in the total portfolio, according to the report.
One of the hotel companies that is strategically expanding into the high end is Choice Hotels International. In the second quarter, Choice continued its segment push with a Cambria opening.
Overview of openings
More than half of the hotels that have already opened in 2024 are high-end and upper-middle, according to Lodging Econometrics, which predicts that the two segments will have the highest growth rates through 2026.
In the first half of this year, 250 hotels with 29,777 rooms opened in the US, according to the report.
Lodging Econometrics predicts an additional 400 projects, or 44,451 rooms, will open during the remainder of 2024, bringing total openings for the year to 650 hotels with 74,228 rooms.
New York is expected to open the most hotels (23) by the end of the year, followed by Dallas (16), Atlanta (15), Inland Empire (14) and Orlando (13).
The closing forecast for 2024 represents a 35% increase over the number of hotel openings in 2023, which stood at 480 hotels, or 60,922 rooms, according to the report.
Looking ahead, Lodging Econometrics analysts forecast that there will be 779 hotel openings in the United States in 2025 and 928 openings in 2026, representing a 1.8% increase in new supply.
One of the big projects set to open in 2025 is the $1 billion VAI Resort in the Phoenix metro area.
