Report: Q1 Hotel Construction Pipeline Strong Despite Pandemic - Sachse Construction
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Report: Q1 Hotel Construction Pipeline Strong Despite Pandemic

Dive Brief:

  • Despite the impact of the coronavirus outbreak, the hotel construction pipeline in the United States increased by 1% in the number of projects and by 3% in the number of rooms from the between the first quarter of 2019 and the first quarter of 2020, Lodging Econometrics reported. However, both the number of projects and rooms in the pipeline decreased by less than 1% from the fourth quarter of 2019.
  • Hotels in the planning stages (1,628 projects/198,742 rooms); those scheduled to start in the next 12 months (2,284/264,286); and projects currently under construction (1,819/243,100); totaled 5,731 and represented 706,128 rooms. The number of hotels under construction in Q1 2020 was at an all-time high.
  • As hotel owners ease up on their deadlines given the disruptions caused by the COVID-19 pandemic during the last 30 days of the quarter, they have extended their opening and construction start dates by four to six months, which will likely lead to more hotel openings in the second half of 2020 when compared to the first half of the year.

Dive Insight:

Although Lodging Econometrics reported that some hotel owners are taking the opportunity to renovate and reposition their properties while occupancy is low (1,385 projects/232,288 rooms), it noted that it is still too early to determine what the total impact of the coronavirus will be on the industry.

Los Angeles had the strongest hotel construction pipeline at the end of Q1 2020 with 166 projects and 27,752 rooms in the planning process, scheduled to start construction in the next year or under construction. Los Angeles was followed by Dallas (164 projects /19,999 rooms), New York City (152/26,111), Atlanta (143/19,423) and Houston (132/13,316). These five markets accounted for 16% of hotel projects under construction in the first quarter.

Three hotel companies made up 69% of hotel projects in the U.S. pipeline at the end of Q1 2020, and those were Marriott International (1,556 projects/204,244 rooms), Hilton Worldwide (1,413/161,743) and InterContinental Hotels Group (IHG) (954/97,547).

The leading brands offered up by these companies made up 20% of the pipeline —  Home2 Suites by Hilton (421 projects/43,816 rooms), IHG’s Holiday Inn Express (380/36,329) and Marriott’s Fairfield Inn (315/30,336).

The three top franchise companies also made headway in the first quarter with brands such as Hampton by Hilton (310 projects/32,146 rooms); Tru by Hilton (302/29,132); Marriott’s TownePlace Suites (217/21,834); Residence Inn (214 projects/26,262); and IHG’s Avid Hotel (195/17,595); and Staybridge Suites (149/15,564).

While it will be months before the industry will know the ultimate effect of the pandemic on hotel construction, there are some hotel companies trying to reduce its effect on medical professionals and their families. At the beginning of April, for instance, Hilton, in partnership with American Express, announced that it would donate up to a million rooms across the country for healthcare workers who need a place to rest or who need to isolate from their families.

Likewise in New York City, where shutdowns have caused a major halt to the local economy, officials are giving a boost to hotels by providing free rooms for medical professionals and volunteers who are attending to patients or helping out during the pandemic.

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