Market Trends of US Hospitality Real Estate Sector Industry
Increase in Number of Hotels
According to the latest United States Construction Pipeline Trend Report, the total US construction pipeline is 5,220 hotels with 621,268 rooms at the close of 2022's second quarter. It was up 9% year over year by projects and 4% year over year by rooms. In Q2 2022, 965 hotels with 130,914 rooms were under construction. It was down 17% year over year by projects and 18% year over year by rooms. Projects scheduled to start in the next 12 months at 2,009 hotels with 232,163 rooms are up 9% year over year by projects and by rooms.
Projects and rooms in early planning reached a record high in the second quarter, at 2,246 hotels with 258,191 rooms. It is up 26% year over year by projects and 15% year over year by rooms. During the first and second quarters of 2022, the US opened 247 new hotels with 28,116 rooms. At the close of Q3, 987 projects/135,050 rooms were under construction in the US Projects scheduled to start construction in the next 12 months stand at 2,074 projects/236,894 rooms. It was up 14% by projects and 13% by rooms YOY, respectively. 733 hotels with 87,253 rooms are expected to open in 2023, representing a 1.5% increase in new supply. Further, 848 hotels with 93,581 rooms are expected to open in 2024 for a 1.6% new supply increase.
Growing Needs for Construction is Driving the Market
International tourism continued its recovery in January 2022, with a much better performance than the weak start to 2021. International tourism showed robust performance in January-September 2022, with arrivals reaching 62% of pre-pandemic levels in the first nine months of 2022. An estimated 700 million tourists traveled internationally between January and September, more than double (+133%) the number recorded in 2021. Strong pent-up demand, improved confidence levels, and the lifting of restrictions in many destinations boosted the results. Monthly arrivals climbed from -64% in January 2022 (versus 2019) to -27% in September, confirming international travel's rapid and sustained recovery throughout the year.
Tourism performance was particularly strong in the third quarter of 2022 (-26% over 2019) when an estimated 340 million international arrivals were recorded worldwide, almost 50% of the nine-month total. International arrivals to the United States grew to 22.1 million in 2021, up from 19.2 million in 2020. Spending by international visitors also grew, reaching USD 81.0 billion, or 34% of 2019's total. Nearly eight in 10 business travelers are expected to attend a conference, convention, or trade show in the next six months, similar to but slightly down from Q2 2022.
