Latin America Pipeline Increases 14%, the 6th Consecutive Quarter of Increases | Lodging Econometrics Reports

Latin America's Total Construction Pipeline rose for a sixth quarter in a row to 528 projects/85,417 rooms in Q2 2011. Total projects are now up 14% and rooms up 6% year-over-year (YoY), propelled by continued rapid Pipeline growth in South and Central America, with projects up 28% and 21%, respectively, in the past year.

At 225 projects/35,803 rooms, Latin America's Under Construction project counts are up 13% YoY, but down 6% by rooms, as the average size of new projects entering the Pipeline has declined by 11 rooms due to the higher proportion of smaller-sized Upscale and Midscale projects. Scheduled Starts in the Next 12 Months, at 139 projects/24,853 rooms in Q2, are up 3% by projects and 8% by rooms from Q2 2010. At 164 projects/24,761 rooms, Early Planning projects are up 28% and rooms by 30% YoY. Project counts have surpassed the previous Q1 2008 peak by 31%. Early Planning totals are expected to continue to build, as many New Project Announcements (NPAs) into the Pipeline are entering in this stage.

Developer enthusiasm is strong in South America, where economic trends are outpacing much of the rest of the world. With 298 projects/45,658 rooms, the region's Total Pipeline is at its highest since Q1 2009. Annualized New Project Announcements into the Pipeline are at their highest since 2008. Brazil's Total Pipeline, with 184 projects/29,790 rooms, represents 62% of South America's total projects. Over the last 18 months, the nation's Central Bank has increased interest rates seven times in an effort to slow rapidly rising inflation and cool its overheated economy. These rate increases are impacting migration up the Pipeline toward construction, resulting in a build-up of projects in Scheduled Starts and even more so in the Early Planning stage, which are at their highest level since 2007.

Central America's Total Pipeline is at a new high of 53 projects/10,674 rooms. Panama and Costa Rica have 58% and 26% of total projects, respectively. With 110 projects/16,226 rooms, Mexico's Pipeline continues to trend downward, as social unrest, particularly in the border towns, have hampered tourism and impacted development. In an effort to encourage investment and development, the Central Bank has reduced interest rates to new cyclical lows.

SPOTLIGHT - BRAZIL'S WORLD CUP CITIES - TOTAL PIPELINE

38% of Brazil's total Pipeline projects and 45% of its rooms are in the 12 cities selected to host the 2014 World Cup football games. The country is building seven new stadiums and upgrading five others for the four-week event. The stadiums in Rio de Janeiro, Belo Horizonte, Salvador, Brasília and São Paulo will also serve as football venues for the 2016 Olympics. Over half a million tourists are expected to attend the World Cup.

NOTABLE DEVELOPMENTS & NEW OPENINGS

• Accor has the largest Total Pipeline in Brazil, with 80 projects/11,961 rooms. 69% of Accor's projects are with its midscale Hotel Ibis brand, which includes four New Project Announcements and seven projects that started construction in Q2.

• With 48 projects/5,133 rooms, InterContinental Hotels Group has the largest Total Pipeline in Mexico. 85% of IHG's Pipeline projects are with the Holiday Inn and Holiday Inn Express brands. Five projects were newly announced in Q2.

• Marriott International announced plans for its first Courtyard location in Mexico City. The 292-room Courtyard Mexico City Airport is being developed with Peñon S.A. de C.V., with opening scheduled for 2012.

• Hilton Worldwide is scheduled to open its first hotel in Panama City, Panama in late 2011, when it converts the former Costa del Sol Hotel into a 213-room DoubleTree. They are also scheduled to open a 351-room Hilton Hotel in Panama City in Q1 2012.