The Central/South America hotel development pipeline includes 141 projects with 21,751 rooms, according to the September 2009 STR Global Construction Pipeline Report released this week.
The Middle East/Africa hotel development pipeline includes 442 hotels comprising 120,589 rooms, according to the September 2009 STR Global Construction Pipeline Report released this week.
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For the first time, Lodging Econometrics (LE) has compiled and announced its 2011 Forecast for New Hotel Openings for Europe, the Middle East and Africa. 322 projects/72,077 rooms are forecasted to come online in 2011. LE has also adjusted its forecasts downward for 2009 and 2010 due to the recessionary declines that continue to impact the lodging industry and project totals in the Pipeline throughout the region. The 2009 forecast has been reduced to 380 new hotels/63,244 rooms, down a substantial 10,328 rooms. The 2010 forecast, adjusted down by 7,340 rooms, calls for New Openings of 392 projects/81,921 rooms.
The global economic crisis, which has affected credit availability and caused decreases in consumer and business travel, resulting in occupancy and room rates declines throughout EMEA, is also having a serious impact on lodging development.
Since its peak of 10,781 projects/1,819,486 rooms in Q2 2008, the Total Global Construction Pipeline has decreased 16% and 17%, respectively, to 9,108 projects/1,502,497 rooms at the end of Q1 2009. The world’s two largest Pipe¬lines show the steepest rates of decline, with the US falling 16% by projects and 21% by rooms and Asia Pacific down 18% by projects and 16% by rooms.
There is mounting evidence that the precipitous economic declines in many countries in Asia Pacific may be close to ending. A bottom is likely forming, hopefully to be followed by a modest recovery. Declines from the peak were caused mainly by the dramatic fall-off in the region’s manufactured exports brought on by the worldwide recession and the drying up of cross-border financing. Like in other regions of the world, the new economic base line will be significantly below the 2007 highs.
In Q1 2009, the US Construction Pipeline decelerated rapidly and now stands at 4,918 projects / 619,431 rooms. Compared to the Pipeline peak in Q2 2008, this is a drop of 16% by projects and 21% by rooms, a substantial fall-off for a three-quarter period. Current pipeline trends are beginning to reflect the deep recession in the economy, the banking crisis, the evaporation of mortgage lending, and serious shortfalls in lodging operating performance.
The total active U.S. hotel development pipeline includes 5,187 projects with 551,610 rooms, according to the March 2009 STR/TWR/Dodge Construction Pipeline Report released this week. This represents a 17.1-percent decrease in the number of rooms in the total active pipeline compared to March 2008. The total active pipeline data includes projects in the In Construction, Final Planning and Planning stages, but does not include projects in the Pre-Planning stage.
Heavily reliant on their manufacturing and exporting industries, Asian economies are seeing sizable, even historic, contraction, as global demand for goods produced in the region has plummeted. Several countries, including Japan, Taiwan and Thailand, reported negative GDP growth in Q4 2008. The blockbuster economies of China and India still expect positive GDP growth this year, however the rate of growth will be significantly slower, falling to rates not seen since earlier in the decade. LE expects the macroeconomic indicators to continue trending downward into 2010.
Europe has the largest Pipeline in EMEA with 971 projects/161,236 rooms at the end of Q4 2008. The Middle East's Total Pipeline has 503 projects/147,488 rooms. Africa's totals 171 projects/35,267 rooms. As in other parts of the world, the Pipelines in these regions are heavily weighted for the near-term. 50% of Europe's projects and 53% of projects in both the Middle East and Africa are already Under Construction. This is due to the rush by developers during Q4 2007 and Q1 2008 and through the fall in the Middle East to get projects in the ground before the availability of lending was further reduced.
Canada’s Total Construction Pipeline peaked in Q1 2008 at 265 projects/ 33,964 rooms. The Pipeline has declined each quarter since then, with Q4 ending at 237 projects/29,408 rooms. This is a total decline from the peak of 11% by projects and 13% by rooms.
At the end of 2008, the Total Construction Pipeline for Latin America was 616 projects/107,433 rooms. Pipeline totals were down 10% by projects and 16% by rooms from the cyclical peak in Q1 2008. While the region’s Pipeline is trending down, to date the retreat is not as steep as it is in other world regions. Developers still consider it an attractive area for lodging development, particularly if they are partnered with a major hotel franchise company. • The region’s Pipeline is front-end loaded, with 55% of total projects already Under Construction. Having secured financing before the economic slowdown and global credit crisis impeded lending, these projects will most likely enter as new supply, with the rate of New Openings ramping up through 2010.
After peaking in Q2 2008, the Total Global Construction Pipeline decreased 6% to 10,169 projects/1,707,817 rooms. All regions reached cyclical peaks in Q208 except Canada, the Caribbean, Mexico, Central and South America, which crested earlier in Q108. All regions experienced a Quarter over Quarter (QoQ) decline in Q308. Many showed a noticeable deceleration in projects and room counts.
In the Asia Pacific region, Construction Starts are at a five-quarter low and will continue to trend downward, closely tracking development trends in the US. Because accessing financing is so difficult, many projects already in the Pipeline cannot migrate forward towards Construction, but are stalled in the Scheduled Starts in the Next Twelve Months and Early Planning stages. Project Cancellations are at an all-time high, reflecting the unavailability of financing and heightening developer concerns about a global slowdown. The fall-off in international travel, guestroom demand and attendant pricing pressures are accelerating and expected to continue to trend downward well into the next year as the full impact of the economic crisis in the region takes hold.
At the end of Q3 2008, Europe, Middle East and Africa’s (EMEA) Total Construction Pipeline stood at 1,656 projects/358,067 rooms. • Total project counts are down 6% from the likely cyclical peak in Q2 2008, with total rooms down 4%. The Total Pipeline will continue to trend downward as New Hotel Openings come online at an accelerated pace in ‘09 and ‘10. New Project Announcements into the Pipeline are expected to taper off. • In EMEA, 53% of Total Pipeline projects are already Under Construction due to the rush to get projects started in late ‘07-early ‘08 before the economy softened further.
LE's Latin America Construction Pipeline Overview at Q3 • The Total Construction Pipeline for Latin America at the end of Q3 2008 (including the Caribbean, Mexico, Central and South America), is 640 projects/113,505 rooms. • In Latin America, 59% of Total Pipeline projects are already Under Construction. These projects secured financing before the global credit crisis impacted lending and the economic slowdown began to affect developer sentiment. These projects will come online as New Supply at an accelerated pace through 2010. • Brazil accounts for 32% of the Total Pipeline with 204 projects/36,065 rooms, followed by Mexico with 145 projects/26,568 rooms and Argentina with 49 projects/6,237 rooms. Puerto Rico, Dominican Republic and Costa Rica follow.
Canada’s Total Construction Pipeline finished at 231 projects/29,517 rooms in Q3. Approximately 80% of these projects are already affiliated with a Brand. The branded Pipeline is dominated by the Upscale, Midscale w/o F&B and Economy segments, with 20%, 26% and 19% of Total Projects, respectively. 79% of the Pipeline’s Total Projects are sized at 200 rooms or less. 44 projects having a total of 7,353 rooms are currently categorized as Independents. It is expected that 70% will make a branding decision before opening, and thus will later be recategorized into the appropriate chain scale segment. 101 projects/16,645 rooms, some 56% of the Total Pipeline Rooms, are located in just 6 cities: Toronto, Niagara Falls, Vancouver, Edmonton, Montreal, and Calgary.
Presented at the fifth annual Hospitality Leadership Forum, held in conjunction with the 2008 International Hotel/Motel & Restaurant Show® in New York on November 8, 2008. The forum brought together visionaries from the hospitality industry and beyond, giving attendees the opportunity to hear firsthand about the forces that will shape the future of the industry.