Lodging Econometrics Reports Q3 2013 US Construction Pipeline Growth Continues at a Modest Pace
November 6, 2013 8:32am
Growth in the Pipeline remains sluggish and is likely to continue that way at least thru early 2014 as ongoing political and economic uncertainty continue to affect developer sentiment.
As of Q3 2013 the Total Construction Pipeline stands at 2,819 Projects/ 358,691 Rooms, a year-over-year (YOY) increase of just 2% by projects and 5% by rooms. Hotels Under Construction have uptrended for nine quarters and are now at 710 Projects/ 92,065 Rooms, a YOY increase of 27% for Projects and 30% for Rooms. Totals for Hotels Scheduled to Start in the Next 12 Months have increased off the bottom established in Q2 2012 and stand at 1,008 Projects/ 122,905 Rooms, a YOY increase of 17% and 22% respectively. Projects in Early Planning have been in steady decline since their peak in Q4 2010, and show a YOY decrease of 19% for Projects and 15% for Rooms.
Projects are migrating through the Pipeline towards opening at a fast clip. As is typical for the early stages of a new real estate cycle, New Project Announcements into the Pipeline (NPA’s) are smaller, free-standing prototypical units of the leading brands and are generally not part of mixed use projects that have longer timelines for approvals and financing. Once announced, they move rapidly towards construction and eventual opening.
The quickened tempo for forward migration is similar for projects already in the Pipeline but previously stalled in Early Planning. Already partially invested, and with the recovery of the broader economy and lodging industry confirmed, developers are anxious to resolve their remaining approval and financing issues necessary to get underway.
The result of both dynamics always cause Early Planning totals to reach cyclical lows in the beginning years of the new real estate cycle. This stage doesn’t replenish its projects until much later in the cycle when the economy is growing at a faster pace and financing for larger projects becomes more accessible.
Upscale and Midscale Branded Projects Dominate the Pipeline
Of the non-casino projects in the Pipeline, 79% have already chosen a brand. 30% of the projects are in the upscale category while 61% are in midscale and mostly consist of extended stay and select and limited service brands.
In the last three years, over 85% of all new openings have been branded. LE estimates that of the 586 Pipeline projects that are currently unbranded, approximately 500 to 525 will choose a brand before opening.
Three companies, with a portfolio of brands across multiple chain scales, are the clear branding leaders. After accounting for casino and unbranded projects, 27% of the remaining Pipeline rooms are branded by Hilton. Marriott follows closely with 26% and then IHG with 21%. 74% of the rooms are with these three franchise companies.
SPOTLIGHT ON NEW YORK CITY
YTD through September, New York City (NYC) has the highest Average Daily Rate at $246 and highest RevPAR at $207 according to STR. At 84.3% it has the second highest Occupancy Rate. The demand growth rate YTD is 5%, outpacing supply growth of 2.6%. Having such strong operating performance, it’s no surprise that NYC also has the largest Construction Pipeline of any market in the country with 151 Projects/ 26,244 Rooms. That represents a very strong 25.6% of its existing Census of Open and Operating Hotels, second only to Austin, TX.
For the top 25 markets at the end of Q3 2013, NYC accounts for 18% of the Total Pipeline Projects and 19% of the Rooms. For the third quarter, NYC has the highest number of NPA’s into the Pipeline at 25 Projects/ 4,159 Rooms, representing 24% of the total for the top 25 markets. It also has the highest number of Construction Starts at 13 Projects/ 2,232 Rooms.
Tags: lodging econometrics,
q3 2013 us pipeline
+1 603-431-8740, ext. 25
Latin America's Construction Pipeline Stalling With Pojects Down 5% YOY
Projects in Canada's Construction Pipeline Up 17% YOY
Mid-Market Brands Led Hotel Sales Volume in 2017
Orlando Tops 2017 Markets with 21 Hotels Sold and Average Selling Price Per Room of $96,402
Hotel Sales Volume Declines, Average Price Per Room Increases Moderately
Extended-Stay Hotels Account for 27% of All Projects Under Construction
2.5% Growth Rate of New Hotel Openings Expected in 2018 & 2019
Upper Midscale and Upscale Projects Lead the U.S. Construction Pipeline Comprising 67% of Total Pipeline
Marriott, Hilton and IHG Lead U.S. Construction Pipeline Comprising 69% of Total Pipeline
Marriott Boasts Largest Franchise in U.S. Construction Pipeline with 1,410 Projects Total
The Year-End U.S. Hotel Construction Pipeline Continues Its Upward Growth Trend, Projects Up 4% YOY
North America, Asia Pacific and EMEA Lead World Regions in Global Hotel Construction Pipeline
Global Hotel Construction Pipeline Up 8% YOY with 12,427 Projects
Shanghai Leads China's Construction Pipeline Followed by Guangzhou, Chengdu and Beijing
Asia Pacific Construction Pipeline Excluding China Up 15% by Projects YOY
Middle East Construction Pipeline Shows Growth with Projects Up 12% YOY
Europe's Hotel Construction Pipeline Up 22% Led by AccorHotels
Latin America’s Construction Pipeline is Stalling, Down 4% by Projects YOY
Projects in Canada's Construction Pipeline are Up 11% YOY
New Openings Growing Steadily as the Cycle Matures
Please login or register to post a comment.