The U.S. hotel construction pipeline declined roughly 5% year over year in the first quarter of 2026, even as luxury development reached a record level, reflecting shifting investment dynamics across the hospitality sector.
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The total U.S. hotel construction pipeline stood at 6,020 projects, or 705,825 rooms, in Q1 2026, according to Lodging Econometrics’ latest U.S. Construction Pipeline Trend Report. Both project and room counts were down compared to the same period in 2025.
Despite the overall slowdown, the luxury segment stood out, reaching a record-high 102 projects during the quarter — a 16% increase year over year. Hotel conversions also remained resilient, with a steady pipeline of 1,461 projects, up 3% from the prior year.
Dallas led all U.S. markets with the largest construction pipeline, totaling 184 projects and 22,861 rooms. Phoenix is forecast to see the most hotel openings in 2026.
The slowdown extended across multiple development stages. Projects currently under construction totaled 1,071 in Q1, marking a roughly 7% decline year over year. Similarly, projects scheduled to begin construction within the next 12 months (2,164) and those in early planning (2,785) also fell compared to Q1 2025.
The contraction is partly attributed to a wave of project completions ahead of major global events. “The pipeline shrunk year over year in part due to many projects finishing and opening ahead of major upcoming events, including the FIFA World Cup,” said Bruce Ford, senior vice president and director of global business development at Lodging Econometrics.
Financing challenges also played a key role. Elevated borrowing costs in 2025 made it difficult for many developers to move forward with new agreements. As a result, a significant number of hotel owners delayed or canceled projects amid rising financial pressures, according to industry findings from the American Hotel & Lodging Association.
However, debt markets are expected to improve through 2026, potentially easing development constraints and reviving project activity.
Even as overall activity slowed, well-capitalized developers continued to invest — particularly in high-end projects. “Still, hotel players who have the capital are spending it,” Ford said, pointing to continued growth in the luxury pipeline.
Major hotel brands, including Marriott International and Hilton, have several luxury developments underway across the U.S., reinforcing confidence in the segment.
Meanwhile, the upscale, upper midscale and midscale segments accounted for approximately 75% of all projects in the pipeline, underscoring their continued dominance in overall construction activity.
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Regionally, Dallas maintained the largest pipeline despite a roughly 9% year-over-year decline. Atlanta followed with 158 projects and 17,524 rooms. Phoenix, Nashville and Austin, Texas, rounded out the top five markets.
Phoenix showed particularly strong momentum, with 36 projects under construction — a 19% increase year over year — and the highest number of new project announcements during the quarter. The city is expected to lead the nation with 27 hotel openings in 2026, followed by New York with 21 and Dallas with 20.
Looking ahead, Lodging Econometrics forecasts that 682 new hotels, totaling 77,323 rooms, will open across the U.S. in 2026 — representing a modest 1.4% increase in new supply compared to last year.
Originally reported by Jenna Graber, Senior Reporter in Hotel Dive.
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