According to the most recent Construction Pipeline Trend Report for the United States by Lodging Econometrics (LE), at the close of Q3 2023, the total U.S. construction pipeline stood at 5,704 projects/672,676 rooms, up 7 percent year-over-year (YOY) by projects and rooms. The hotel construction pipeline continues to grow at a moderate pace with current project counts 3 percent below and rooms 14 percent below the all-time high of 5,883 projects/785,547 rooms reached in Q2 2008.
At the close of the third quarter, there were 1,063 projects/140,331 rooms under construction, up 8 percent by projects and 4 percent by rooms YOY. Projects scheduled to start construction in the next 12 months stand at 2,234 projects/257,729 rooms, up 8 percent YOY by projects and 9 percent YOY by rooms. Projects and rooms in the early planning stage each increased 7 percent YOY to stand at 2,407 projects/274,616 rooms, just 27 projects and 5,296 rooms shy of the all-time high.
Analysts at LE reported that the upper midscale chain scale had the largest project count of all chain scales in the total U.S. construction pipeline, accounting for 38 percent of the projects and standing at 2,149 projects/209,895 rooms at the Q3 close. Following is the upscale chain scale with 1,376 projects/170,943 rooms at the close of the quarter. Together, these two chain scales comprise 62 percent of all projects and 57 percent of the rooms in the total U.S. hotel construction pipeline.
At the end of 2023’s third quarter, 2,176 projects/223,518 rooms in the U.S. construction pipeline were extended-stay projects, accounting for 38 percent of projects in the total pipeline. Middle-tier extended-stay brands made up the majority of projects in the extended-stay segment in Q3, accounting for 63 percent of projects in the total extended-stay pipeline and 24 percent of projects in the total U.S. construction pipeline.
Renovation and conversion activity remained steady at the end of Q3, with conversion projects and rooms hitting the highest counts ever recorded by LE and ending the quarter at 1,100 projects/146,757 rooms. Combined, the renovation and conversion active pipeline accounts for 1,912 projects and 285,568 rooms, a peak total room count at the end of Q3 2023. LE analysts expect this trend to continue into 2024 and 2025.
Through the third quarter, 345 new hotels with 41,115 rooms opened in the United States with another 182 hotels/24,790 rooms anticipated to open by the end of the year. LE analysts forecast a total of 527 new hotels with 65,905 rooms to open in 2023, representing a 1.2 percent increase in new hotel supply. LE analysts expect new hotel openings to increase in 2024 and 2025, representing a 1.4 percent and 1.5 percent supply increase, respectively.