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The Lodging Industry Investment Council‘s recent annual survey found that 64% of respondents said that new lodging supply/general oversupply was the second greatest threat to their hotel investment in 2019. The first major threat, low unemployment (availability of labor), was noted by 67% of LIIC members, a jump from 49% in 2018.

During the year ended December 31, 2018, the lodging industry added approximately 115,000 gross rooms to the industry supply and net room growth was approximately 1.7%. Since 2002 an average of about 84,000 gross rooms were added per year, with a high of approximately 146,000 in 2008 and a low of about 38,000 in 2011.

While the lodging classification used for the construction value put in place includes hotels, motels, resort lodging, tourist courts and cabins, and similar facilities it mirrors the line graph for the growth in gross new rooms added to supply. In March 2019, the estimated seasonally adjusted annual rate of lodging construction spending was $33.685 billion, 1.5% above the February 2019 estimate of $33.181 billion and 7.7% above the March 2018 estimate of $31.274 billion.

Of the five major construction types displayed in the following graph, educational, health care, commercial, office and lodging; educational construction spending topped the group at a seasonally adjusted rate of $96.736 billion, up 4.1% on $92.908 billion in March 2018. This was followed by commercial spending of $86.074 billion, office spending of $77.426 billion and health care at $42.128 billion.

Source: US Census Bureau – The Value of Construction Put in Place Survey (VIP).

For another perspective on the value of lodging construction spending we compared it with amusement and recreation and religious spending as illustrated in the accompanying graph. The amusement and recreation category includes construction expenditure on such projects as theme/amusement parks, sports facilities such as gymnasiums, stadiums, outdoor fields, fitness centers, convention centers, movie theaters and casinos.

In March 2019, the estimated seasonally adjusted annual rate of amusement and recreation construction spending was $27.065 billion, just $6.62 less than lodging construction spending of $33.685 billion.

Interestingly, the estimated seasonally adjusted rate of lodging construction spending was only $3.117 billion more than religious construction spending in January 2002, $11.862 billion compared to $8.745 billion. Religious construction was at a seasonally adjusted annual rate of $2.973 billion in March 2019, down 3.9% on March 2018, continuing a trend over the past sixteen years.

Source: US Census Bureau – The Value of Construction Put in Place Survey (VIP).