U.S. hotel construction reached historic levels in the last quarter of 2024, with Southwestern among the markets leading future growth, according to Lodging Econometrics’ (LE’s) Hotel Construction Pipeline Trend report.
The total pipeline reached a new project record of 6,378 projects with 746,986 rooms, showing year-over-year (YOY) growth of 7 percent in projects and 8 percent in rooms. Southwest cities finishing in the top five were Phoenix, with 130 projects (16,824 rooms), and Inland Empire, Calif., with 122 projects (12,234 rooms). Outside the Southwest, the top three markets were Dallas, dominating with 204 projects (23,669 rooms), followed by Atlanta with 168 projects (19,431 rooms), and Nashville, Tenn., with 130 projects (17,029 rooms).
Significant growth in new projects
According to LE statistics, construction on U.S. hotel projects increased YOY across all project stages (early planning, new construction, openings, etc.). As of Jan. 22, there are 1,149 projects currently under construction, totaling 142,238 rooms.
Phoenix leads the Southwest and ranks second nationwide, with 31 projects (4,788 rooms). Inland Empire ranks fifth in the country, with 19 projects under construction (1,962 rooms). Outside the Southwest, New York City ranks first, with 36 projects (5,928 rooms); Dallas is third with 31 projects (3,467 rooms); and Atlanta is fourth with 27 projects (3,211 rooms).
The most development in the hotel construction pipeline appears in the early planning stage, which reached record-breaking counts with 2,970 projects and 345,640 rooms. This is significant growth compared to past years, with projects up 15 percent and room counts increasing by 19 percent YOY.
Los Angeles is the only Southwestern state ranking in the top five for projects in the early planning stage—in fourth, with 56 projects totaling 9,243 rooms. The South leads in this stage: Dallas, first, with 95 projects (11,346 rooms); Atlanta, second, with 79 projects (8,675 rooms); Nashville, third, with 64 projects (7,840 rooms); and Austin, Texas, fifth, with 55 projects (5,974 rooms).
Upper-midscale hotels lead the pipeline with a record-breaking 2,354 projects and 227,845 rooms. Upscale hotels follow with 1,471 projects and 182,474 rooms. Midscale hotels attained a new record with 957 projects and 80,436 rooms, and upscale hotel chains reached a record 338 projects at the end of Q4 2024.
New hotel openings
There were 583 new hotel openings in the U.S. market, accounting for 67,995 rooms, through Q4 2024. This expanded the country’s hotel supply by 1.2 percent.
Phoenix ranked fifth nationwide, with 10 new hotel openings (1,230 rooms). Outside the Southwest, the top four were New York City, with 16 hotels (1,824 rooms); Dallas, second, with 14 new hotels (1,847 rooms), Nashville, third, with 13 new hotels (1,770 rooms); and Orlando, Fla., fourth, with 11 hotels (1,908 rooms).
Looking ahead, LE estimates even stronger growth nationwide, with 730 new hotels and 82,538 rooms expected to open in 2025—which would increase the national supply by 1.5 percent. Growth is expected to increase even more in 2026, with 904 new hotels and 97,328 rooms scheduled to open—which would further boost the national supply by 1.7 percent.
Renovation and conversion projects
Renovation project activity showed a slight decline in Q4 2024 but remained busy, with 661 projects encompassing 127,080 rooms. Together, both renovation and conversion hotel developments in the United States totaled 1,997 projects with 255,816 rooms.
The Southwest did not rank in the top five for renovations or conversions. Washington, D.C., led the top five for these combined projects, with 34 projects comprising 5,204 rooms. Chicago (7,514 rooms) and Charlotte, N.C., (3,384 rooms) each had 31 projects, ranking second and third, respectively. Houston ranked fourth with 30 projects (4,335 rooms), and Atlanta finished fifth with 28 projects (3,595 rooms).
New construction
For planned construction, beginning anytime within the next 12 months, 2,259 projects with 259,108 rooms are scheduled to break ground.
Phoenix ranks fifth in the nation, with 48 projects (6,272 rooms). The South dominates in this segment as well. Dallas is ranked first, with 78 projects (8,856 rooms); Atlanta, second, with 62 projects (7,545 rooms); Austin, third, with 53 projects (6,663 rooms); and Nashville, fourth, with 48 projects planned (6,533 rooms).
Lodging Econometrics (LE) is a leading provider of business development database programs to hotel franchise companies, lodging industry vendors, ownership and management groups, Wall Street analysts, and industry consultants.
