In the U.S. right now, there are 76 hotel companies overseeing 10 or more active projects involving new construction, brand conversions, renovations or hotel acquisitions, according to Lodging Econometrics’ Bruce Ford. These 76 companies collectively manage an active portfolio of 1,348 projects, encompassing 210,307 rooms. Additionally, their current open and operating holdings in the United States comprise 6,461 hotels with a total of more than 1.16 million rooms.
LE’s activity report indicates the investment and displays the volume of those top companies, said Ford, who is Lodging Econometrics' senior vice president and director of global business development. “There [are] only 76 companies controlling 1,348 projects—that’s just massive,” he said. “In terms of things that people are going to grab on to, this is kind of the next phase of what people are looking to talk about, because I have this conversation every single day, and it applies everywhere, all over the industry. Whether you sell a product or service [or] you're a franchise company [or if] you're an owner and management company yourself, knowing the activity level of other companies can change the way you strategically think about the hotel business.”
In total in the United States, there are 201 hotel ownership and management companies that have five or more active hotel construction projects (new construction projects, renovations, brand conversions or hotel acquisitions). These 201 companies manage an active portfolio of 2,156 projects and 333,050 rooms. The current open and operating hotels portfolio for these 201 groups in the U.S. consists of 11,623 hotels and 1.94 million rooms.
At the end of the second quarter, the U.S. had a total of 6,095 hotels with 713,151 rooms in the pipeline. This new all-time high represents a 9 percent year-over-year increase in projects and an 8 percent year-over-year increase in rooms compared to Q2 2023 totals.
There were 1,171 projects comprising 147,611 rooms under construction, a 10 percent increase in projects and a 4 percent increase in rooms year over year at the end of the second quarter. Projects slated to start construction in the next 12 months total 2,350 projects with 268,378 rooms, reflecting a 5 percent increase in projects and a 3 percent increase in rooms year over year.
Projects and room counts in the early planning stage increased 13 percent and 15 percent year over year, respectively, ending the quarter at 2,574 projects and 297,162 rooms. LE expects that as interest rates begin to decline, projects scheduled to start in the next 12 months will move to under construction status rather quickly.
Looking ahead, in addition to the potential increase in projects, Ford predicts the change in interest rates will also spark an increase in hotel transactions. “If [the Fed] goes for a full half-point cut in September, it will spark a lot of activity all around the industry,” he continued.
Geographic Growth
When a development cycle starts, investment in the hotel business starts in the middle of the U.S., from Chicago to Dallas and then spreads out to the coasts, Ford explained. The Southeast comes next, then Northwest and then it ends in southern California and north of Manhattan.
“If you add the Dallas market and the Fort Worth market together, there's no place else in the world that can touch it,” Ford said. “If you added that up, there [are] some 410 projects in total in Dallas metro area.”
Many of the new brands that have premiered since 2016—and there’s been 147 of them—all have to get their locations in and around the Dallas metroplex, Ford continued.
Ten states claim 60 percent of the rooms in the pipeline, according to LE: Texas, California, Florida, Georgia, Tennessee, North Carolina, Arizona, New York, Alabama and Michigan.
This article was originally published in the September edition of Hotel Management magazine. Subscribe here.