PORTSMOUTH, NH—In the past seven quarters, the total construction pipeline for hotels in the United Stares has continued to show growth, with the last three quarters posting year-over-year gains of 20% or more, according to a statement from Lodging Econometrics. Now at 3,885 projects/488,230 rooms, it is still a third below the peak of 5,883 projects/785,547 rooms established in the Q1 2008.

The current pipeline is about halfway through the expansion phase of the current real estate cycle, and is expected to have at least two more years of rapid growth before entering the maturity or “topping out” phase of the cycle. As of Q1 2015, there are 1,117 projects under construction, resulting in 141,302 rooms. This is an over 25% increase for both projects and rooms from last year's numbers, the LE report states.

Projects planned to start in the next 12 months come in at 1,599 projects and 189,473 keys. That's a significant increase from last year's Q1, when it was 1,327 projects and 161,748 rooms.

Both the projects currently under construction and those set to begin in the next 12 months determine the amount of new supply entering the market over the next two years. Despite the increase in numbers, the totals still remain significantly below the peaks established during the previous cycle.

Before the possibly problematic influx of new hotel openings, LE predicts a few more years of sustained profitability. For example, the growth rate of Q1 guest room demand is at 4.2%— four times greater than the new supply growth.

Interest rates are remaining low and with the Fed's hints of postponing increases until the fall, there is promise of continued mortgage availability.

Easy money has helped strengthen transaction activity as increased buyer competition for prized assets has pushed up selling prices. This push creates a more attractive market for investors to build new projects rather than to buy existing hotels, the LE report states.

Roughly 75% of the 3,846 projects (not including casinos) are represented by two chain scales: upper midscale with 1,676 projects—an increase of 20% YOY; and upscale with 1,249 projects which is up 24% YOY. Many of these projects are in the works to begin in the next 12 months.

These projects are rapidly moving through the pipeline due to their short permitting and construction timeline and are generally smaller scale projects containing less than 200 rooms.

According to the LE report, 79% of these upper midscale and upscale projects have already made branding decisions. For upper midscale, 22% have chosen IHG's Holiday Inn Express and an additional 21% have chosen Hilton's Hampton Inn and Suites.

Upscale has chosen Marriott's Courtyard and Residence Inn, making up 29% of the brands picked. Additionally, Hilton's Homewood Suites and Garden Inns make up a combined 23% of brands.

Despite having fewer projects than the upper midscale or upscale brands, upper upscale brands show the largest YOY increase with 41%. These upper upscale projects are usually larger hotels; often part of mixed-use developments with longer permitting and construction timelines, leading these projects to accelerate after the expansion phase of the cycle is well underway.  These hotels often open late in the cycle—taking three or more years from announcement to opening.