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Hotel construction booms as U.S. pipeline hits record high in 2024

Written By Alexis Nicols

Fueled by strong demand and ongoing investment in luxury and boutique accommodations, the U.S. hotel construction pipeline has reached a historic peak. Lodging Econometrics reports that as of Q3 2024, there are over 6,200 hotel projects in the pipeline, reflecting substantial industry growth as developers respond to evolving traveler expectations and market dynamics.

This surge, predominantly driven by the steady rise in tourism and business travel, spans various segments, with luxury and upscale hotels seeing the most significant expansion. Major urban centers and high-demand leisure destinations continue to attract substantial investment, highlighting the industry’s focus on areas with sustained visitor interest. Despite challenges in construction costs and labor shortages, developers are pushing forward with ambitious plans, reshaping the hospitality landscape nationwide.

STR’s findings indicate that the upscale and upper midscale hotel segments dominated the September room pipeline. Vice President of Analytics Isaac Collazo noted that these segments made up approximately half of all rooms in the final phase of the pipeline during the month. Luxury and midscale rooms under construction exhibited the highest growth rates, increasing by 48.5% and 34.5% year over year, respectively.

“Growth in rooms in construction has accelerated over the last seven months,” Collazo said in a statement. “Despite higher interest rates throughout 2024, developer appetite has remained strong. With the recent rate cut in September, and with more on the way, investor sentiment remains positive, as evidenced by continued double-digit growth across the planning and final planning stages of the pipeline.”

Further expected rate cuts are anticipated to galvanize more hotel transactions, according to Kevin Davis, Americas CEO of JLL Hotels & Hospitality Group, who shared this insight at the Lodging Conference earlier this month. Extended Stay America President and CEO Greg Juceam advised, “Get your contractors and your project managers lined up now. … It’s going to be an amazing ride [in] 2026 and 2027.”

As the sector continues to expand, industry experts will monitor developments closely to see how they impact regional markets and long-term industry performance.

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