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.
The Total Global Construction Pipeline is at a record high in H1 2008, with 10,781 projects and 1,819,486 rooms, up 28% year-over-year (YoY). 41% of Total Pipeline projects and 46% of Total Rooms are already Under Construction. Because of this, LE’s Forecast for New Hotel Openings is set to accelerate in 2010. The United States has the largest Pipeline with 43% of the Global Total, followed by Asia Pacific, then Europe. A fall-off in Pipeline totals is becoming evident, as developer sentiment is impacted by the credit crisis and economic slowdown. This points to a possible cresting for New Openings after 2010.
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, has released its US Construction Pipeline Report for Q2 2008, announcing 5,883 projects with 785,547 guestrooms in the Total Pipeline. Showing only a moderate quarter-over-quarter (QoQ) increase, project and guest room counts in the Total Pipeline are at new peak levels, but appear to be cresting. New visibility on the economy, the lending crisis and lodging operating trends emerged during the second quarter, which served to dampen developer sentiment considerably. As a result, key development metrics have softened, indicating that both project migration within the existing Pipeline and the pace of New Project Announcements into the Pipeline are beginning to ebb.
According to Lodging Econometrics, Asia Pacific’s total construction pipeline has 2,226 projects/506,646 rooms as of the end of Q2, givin the region has the second largest pipeline in the world. Although at a new peak, pipeline totals are in a “topping out” formation, changing minimally over the last three quarters. This cresting presages a slowdown ahead in the explosive development growth seen this decade.
Europe’s Total Construction Pipeline is at 1,022 projects/172,249 rooms at the end of Q2. Key Development Metrics indicate the economic slowdown and tight lending environment are eroding developer sentiment, meaning that the Pipeline has likely reached peak levels for the cycle and will be in decline moving forward. At the front end of the Pipeline, Under Construction totals have risen steadily for the last six quarters and appear to be at their zenith at 574 projects/94,994 rooms. These projects acquired financing before the global credit crisis crested and are expected to come online as New Hotel Openings through early 2010.
Pipeline Highlights at Q2 | At the end of Q2, the Construction Pipeline project count likely reached a high for this cycle at 329 projects/65,115 rooms. | 160 projects, 49% of the Pipeline, have not begun construction as yet. | 71% of the Pipeline’s total projects have selected a brand. | The region’s Pipeline has a heavy concentration of Luxury and Upper Upscale projects sited at resort beachfront destinations. There is also significant development of Midscale brands, particularly in Mexico’s secondary cities. | Activity for projects with vacation ownership components is brisk, with 3,870 Timeshare and 9,389 Condo Hotel units under development. Also, there are 49 hotel projects developing a total of 8,138 Private Residences.
The Construction Pipeline stands at 245 projects 32,499 rooms, a slight decline from the cyclical peak in Q1 2008 - With 103 projects 17,181 rooms, the top 6 markets account for 42% of the total projects and 53% of all rooms in the Pipeline - 33% of Pipeline projects are already Under Construction and near certain to come online as New Supply - Nearly 80% of the projects in the Pipeline have already made branding decisions - Development is heaviest in Upscale, Midscale without Food & Beverage and Economy. The average project size is 133 rooms - LE has revised its Forecast for New Hotel Openings downward to a 3.4% gross growth rate in 2008 and 3.3% in 2009.
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, has released its Construction Pipeline Report for Europe, announcing the Total Construction Pipeline at a new cyclical high of 1,031 projects/172,815 guestrooms at the end of Q1 2008. LE President Patrick Ford commented, “The Pipeline in Europe continued to grow, propelled by peak occupancy rates, ADR and RevPAR in many markets, as well as the ongoing global development surge of the very popular, smaller, contemporary branded hotels, particularly in the upscale and mid-market segments.”
According to its newly released Construction Pipeline Report for the Middle East, Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, shows the Total Construction Pipeline at a record high 527 projects with 155,989 guestrooms at the end of Q1 2008. LE President Patrick Ford commented, “There has been a tremendous surge in the Development Pipeline, particularly in Dubai, Abu Dhabi, Saudi Arabia, Oman, and Qatar. World-class, master planned communities – luxurious beachfront resorts and residential developments, business and financial centers, modern new airports, and tax-free business and industrial zones - are providing once-in-a-lifetime opportunities for developers, investors, global lodging brands, architectural and design firms, and vendors/suppliers to the industry.”
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, announced that Canada’s Construction Pipeline totaled 265 projects and 33,964 guestrooms at the end of Q1 2008, a high for the cycle. LE President Patrick Ford noted, “Hotel construction in Canada has been solid. The total number of guestrooms in the Pipeline grew for an eighth consecutive quarter, and is up 14.2% year-over-year.” All projects included in the LE Pipeline have dedicated land parcels, are being actively pursued by developers and have been verified by the brands.
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, announced that the Construction Pipeline stood at 5,807 projects and 779,307 guestrooms at the end of Q1 2008, a record high for both project and room counts. The pipeline continues to soar. It’s a 60,920-room boost, an 8.5% increase over Q4 2007, and the 29th consecutive quarterly increase dating back to 2004. All projects have dedicated land parcels, are being actively pursued by developers and have been verified by the brands.
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, announced in its 2008 Outlook for the Lodging Industry that the Construction Pipeline stood at 5,438 projects and 718,387 guestrooms at the end of 4Q 2007, breaking through the 700,000 guestroom barrier for the first time.
Portsmouth, N.H. | Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, released its latest report to the Lodging Industry, announcing the New Construction Pipeline in the United States set a record at 5,011 projects / 654,503 rooms, making Q3 the fifth consecutive record-setting quarter.
Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, reported to the Lodging Industry that there are a total of 814 hotels having 139,133 rooms in the Construction Pipeline throughout Europe. LE President Patrick Ford said, “Hotel Construction is at a robust pace. Half the Pipeline, 407 projects / 72,205 rooms, are already Under Construction. That means that a record 292 hotels / 45,598 rooms are set to open throughout the region in 2008.
Portsmouth, N.H. | Lodging Econometrics (LE), the Global Authority for Hotel Real Estate, reported to the Lodging Industry that there are a total of 1,555 Hotels with 366,679 rooms in the Construction Pipeline for the 24 countries in the Asia-Pacific region. LE President, Patrick Ford, said, “Hotel Development is at a hectic pace— the Pipeline for the region has reached new record highs.