Analyzing the U.S. Hotel Industry’s 2023 Performance and 2024 Projections

The U.S. hotel industry is poised for substantial growth in 2024, following a significant upturn in construction and renovation projects in 2023, as reported by Lodging Econometrics (LE). The industry witnessed a dynamic year with the launch of numerous hotels and the development of new projects, setting the stage for continued expansion in 2024.

At the end of the third quarter of 2023, the U.S. had 59,569 operational hotels with 5,647,346 rooms. The addition of 345 new hotels, equating to 41,114 rooms, marked a significant increase in the industry’s capacity. LE’s forecast for the fourth quarter of 2023 included an additional 182 hotels and 24,790 rooms. Assuming these projections were met, the total would rise to 59,751 hotels and 5,672,136 rooms by year-end, indicating a 1.2 percent year-over-year growth.

For 2024, LE projects a further increase with 664 new hotels and 79,286 rooms, reflecting a 1.4 percent rise year-over-year.

Hotel Construction and Renovation Trends

• Construction Pipeline: As of Q3 2023, the U.S. hotel construction pipeline comprised 1,063 projects (140,331 rooms), an eight percent increase in projects and four percent in rooms year-over-year. The projections for 2024 are even more promising, with 2,234 projects (257,729 rooms) expected to begin, signifying an eight percent and nine percent rise in projects and rooms, respectively.
• Early Planning Stages: The industry is nearing an all-time high in early planning stages, with 2,407 projects (274,616 rooms) underway, just shy of breaking previous records.
• Renovations and Conversions: The renovation and conversion sector saw 1,100 projects (146,757 rooms) in Q3 2023. The active pipeline for renovations and conversions expanded to a record 1,912 projects (258,568 rooms).

Hospitality Employment Statistics

Despite these growth figures, the employment scenario in the leisure and hospitality sector remains subdued compared to pre-pandemic levels. December 2023 saw a modest addition of 40,000 industry jobs, averaging 39,000 new jobs per month throughout the year, which is significantly lower than the 88,000 monthly additions in 2022.

Year-End Sector Performance

The last week of 2023 showed improvement in the U.S. hotel sector performance over the previous week, according to CoStar. However, year-over-year comparisons revealed a decline, with occupancy rates at 50.1 percent (a 7.1 percent decrease from 2022), Average Daily Rate (ADR) at $163.58 (down 2.8 percent), and Revenue per Available Room (RevPAR) at $82.01 (a 9.7 percent decline). This downturn was partly due to the week in 2022 including New Year’s Eve, typically a strong period for the industry.

Regional variations were notable, with Miami and Anaheim experiencing growth in occupancy, ADR, and RevPAR, while Las Vegas and Nashville faced significant declines in RevPAR.

In conclusion, the U.S. hotel industry’s 2023 performance and 2024 outlook reveal a sector on the rise, with robust growth in construction and renovation projects, despite challenges in employment figures and year-end performance variances across different markets.