U.S. Hotel Industry in Q1 2025

Resilience Amidst Uncertainty: U.S. Pipeline Growth

The U.S. hotel development sector began 2025 on a strong note, exhibiting a notable 5% year-over-year (YOY) increase in total projects and a 6% increase in rooms, culminating in 6,376 projects and 749,561 rooms by the end of Q1. This growth, while slightly moderated from Q4 2024’s historic high, signals a deliberate yet persistent momentum in development. The modest quarter-over-quarter dip (just two fewer projects than Q4) underscores how developers are pursuing expansion strategically, balancing long-term confidence with short-term economic caution.

What stands out most is the surging confidence in the long-term hospitality outlook, reflected in the double-digit growth of the early planning pipeline. Projects in this category grew by 10% YOY in project count and 13% in room count, reaching nearly 3,000 developments. This rise suggests that, despite financing headwinds, developers are actively shaping the future inventory pipeline.

Stage-by-Stage Pipeline Breakdown: Understanding the Development Lifecycle

The U.S. hotel pipeline reveals important nuances when analyzed across its three core stages:

• Under Construction: 1,152 projects totaling 145,368 rooms were under construction in the U.S. by quarter-end Q1 2025. This is up just 1% YOY by project count and 3% by rooms.
• Final Planning (Scheduled to Start Within 12 Months): Encompassing 2,286 projects and 263,370 rooms, this category saw a stable 1% YOY rise. Projects in this stage indicate firm commitments and clear signals for near-term supply increases, especially in high-demand segments.
• Early Planning: This category saw the most robust expansion, with 2,938 projects and 340,823 rooms—up 10% and 13% YOY, respectively. This signals long-range optimism and an eagerness to initiate projects once market conditions stabilize.

The relatively slow shift from early planning to active construction points to capital constraints and permitting complexities. Still, the growing pipeline reinforces that developers remain committed to hospitality despite temporary friction.

Segment Focus: Extended-Stay and Upper Midscale Take Center Stage

A defining trait of the Q1 2025 pipeline is the strategic pivot toward Upscale and Upper-Midscale properties—roughly 50% of the overall pipeline.

New York City leads the nation with just under 8,000 rooms in construction, and despite recent changes to permitting regulations, it also has about 10,000 rooms in the planning or final phases. Across the Top 25 largest lodging markets, 58,000 rooms are under construction, accounting for 38% of the national total, slightly above their 35% share of the existing hotel supply. If all these rooms come online as projects, markets such as NYC, Phoenix, and Nashville could experience the largest percentage increases in supply, placing downward pressure on occupancy and room rate growth.

The composition of the development pipeline has remained largely unchanged over the past three decades, with limited-service branded hotels dominating. These lower chain scale hotels appeal to consumers, developers, and lenders alike, comprising approximately 70% of all rooms under construction. Developers consistently indicate that the future of U.S. hotel development lies in limited- and select-service properties. While luxury hotels are still being planned, they often require a condominium component to make projects financially feasible. These condos are typically pre-sold, and the proceeds are used to help fund both the hotel and condo portions of the development.

Conversions Surge as Developers Adapt

Conversions reached historic highs in Q1 2025, with:

• 1,421 projects (136,668 rooms) converted—a 13% increase YOY.
• Total combined conversions and renovations climbed to 2,050 projects.

Conversions offer quicker time-to-market, reduced capital expenditure, and strategic reuse of underperforming assets. In the face of high construction costs and tightening lending conditions, this shift underscores the industry’s flexibility and operational savvy.

A Closer Look at Brand-Level Development Activity in the U.S.

Hilton Worldwide

Hilton claims the largest share of rooms under construction globally (~251,700). While precise U.S.-only construction figures aren’t detailed, estimates suggest nearly 1,000 U.S. projects are actively being built. Hilton also approved 32,000+ rooms for future development, reinforcing its long-term growth narrative.

Marriott International

With 1,333 properties under construction and an additional 306 in final planning, Marriott’s U.S. development footprint remains strong. The company emphasizes conversions, which account for one-third of signings and openings, showcasing its versatile approach.

Wyndham Hotels & Resorts

Wyndham’s pipeline is especially notable for its 77% focus on new construction, with an estimated 162 U.S. projects in final planning. This long-term, ground-up strategy contrasts with competitors’ heavier reliance on conversions.

IHG Hotels & Resorts

IHG is expanding via conversions, which comprised 60% of openings and 40% of new signings in Q1. This conversion-led model positions IHG as an agile operator adapting quickly to market shifts. Approximately 143 projects are under construction and 110 in final planning.

Hyatt Hotels Corporation

Hyatt reported a record 138,000-room global pipeline, buoyed by strong interest in its new midscale brands like Hyatt Studios. Its brand diversification reflects an intent to capture cost-sensitive travelers. Approximately 32 projects are under construction and 110 are in final planning stages.

Best Western (BWH Hotels)

Best Western’s U.S. data is limited, with only 10 projects in the pipeline.

Conclusion: Strategic Patience, Tactical Flexibility

The U.S. hotel development pipeline in Q1 2025 reflects a dual-track strategy: developers are positioning for long-term opportunity while employing short-term caution in response to economic conditions. The steady increase in projects under construction and final planning demonstrates ongoing confidence, while the dramatic growth in early planning and conversions highlights an industry that is preparing today for tomorrow’s demand.

Brands like Hilton and Marriott continue to lead with robust development pipelines, combining new builds with adaptive reuse strategies. Others, like Wyndham, are placing long bets on ground-up development. Meanwhile, IHG and Best Western are leaning into flexible, conversion-based models.

Overall, the U.S. hotel industry in Q1 2025 presents a picture of measured optimism, smart risk management, and relentless strategic planning—a sector resilient in the face of volatility and poised for long-term growth.