The U.S. hotel industry
is gearing up for a robust year ahead, with a notable surge in construction
projects and renovation activities. Fresh insights from Lodging Econometrics (LE) highlight
the burgeoning growth trajectory of the sector.
By the close of
the third quarter, the U.S. boasted 59,569 operational hotels, offering a total
of 5,647,346 rooms. The year 2023 witnessed the launch of 345 new hotels, equivalent
to 41,114 rooms. The hotel intelligence company had anticipated the addition of
182 hotels and 24,790 rooms in the fourth quarter of 2023, although it did not
specify whether that watershed had been reached by year-end.
If those
projections reached fruition, the nation's hotel landscape would now encompass
59,751 hotels and 5,672,136 rooms, marking a 1.2 percent year-over-year increase.
Looking ahead to 2024, LE projected a steady incremental growth with 664 new
hotels and 79,286 rooms, reflecting a 1.4 percent rise year-over-year.
Hotel Construction
Figures
Delving deeper
into the construction pipeline, the data reveals that, as of 2023’s Q3, 1,063
projects, encompassing 140,331 rooms, were in progress. This equates to an eight
percent growth in projects and a four percent uptick in rooms year-over-year.
The momentum is expected to intensify this year, as 2,234 projects, housing
257,729 rooms, are slated to commence construction in 2024—a remarkable eight
percent and nine percent rise in projects and rooms respectively year-over-year.
From another
standpoint, the industry is sitting just shy of hitting an all-time high in
terms of projects in their early planning stages. Those currently number 2,407,
with 274,616 rooms, representing a seven percent growth year-over-year. These
figures come tantalizingly close to breaking previous records, falling short by
just 27 projects and 5,296 rooms.
Hotel
Renovation Numbers
In a separate but
related trend, the realm of renovations and conversions is experiencing an
unprecedented boom. As of Q3 2023, a staggering 1,100 projects and 146,757
rooms were undergoing refurbishments or transformations. The momentum remains
robust, with the active renovation and conversion pipeline swelling to 1,912
projects and 258,568 rooms—marking a record high in the latter category. LE’s are
optimistic these favorable trends will continue, predicting they’ll persist
over the next two years.
Hospitality
Employment Stats
However, amidst
these growth figures, the employment landscape within the leisure and
hospitality sector remains depressed since pre-pandemic times. December 2023
saw the modest addition of 40,000 industry jobs. Throughout 2023, the sector
averaged a monthly addition of 39,000 jobs—a figure that pales in comparison to
the robust addition of 88,000 positions added monthly throughout 2022.
2023’s Closing Sector
Stats
During the very
last week of 2023, U.S. hotel sector performance showed improvement over the
week prior, according to CoStar’s latest data on the week ending December 30.
CoStar is a prominent provider of real estate market information, analytics and
insights. Because of the incorporation of this latest data, year-over-year
comparisons were adjusted downward, STR
reported.
People paying in hotel reception (Photo via macniak / iStock / Getty Images Plus)
Specifically, for
the week of December 24-30, 2023, the occupancy rate stood at 50.1 percent,
marking a 7.1 percent decline from the corresponding week in 2022. The Average
Daily Rate (ADR) similarly dipped by 2.8 percent to US$163.58, while Revenue
per Available Room (RevPAR) experienced a sharper decline of 9.7 percent,
settling at US$82.01. This negative trajectory can be attributed to the fact
that the corresponding week in 2022 included New Year's Eve, a traditionally
robust period for the hospitality industry.
Delving deeper
into regional performances, Miami
emerged as a standout among the Top 25 Markets, registering a notable
year-over-year surge in occupancy by 3.9 percent to reach 79.6 percent. This
uptick was bolstered by events such as the Capital One Orange Bowl and the
ensuing New Year’s Eve festivities. In California,
the resort destination Anaheim showcased significant growth in both ADR and
RevPAR, with spikes of 11.9 percent (reaching US$219.71) and 12.5 percent
(reaching US$160.25), respectively.
However, not all
markets experienced such positive outcomes. For instance, Las
Vegas and Nashville grappled with substantial declines in RevPAR, which plummeted
by 28.3 percent (to US$112.79) and 27 percent (to US$80.19), respectively,
underscoring the diverse challenges faced by different hospitality hubs in the
current landscape.
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