LE’s Inaugural Global Construction Pipeline Report Details the Worldwide Lodging Construction Boom at a Total of 10,781 Projects/1,819,486 Rooms
Pipeline Highlights at H1 2008
- 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.
LE’s Global Construction Pipeline Report documents the most extraordinary period of lodging development in history. Rapid growth was spurred by the rise of globalization, the interconnectedness of economies and markets, the unprecedented availability of both debt and equity capital, the accelerating development of emerging economies, the soaring migration of people from rural communities to urban centers and their rise into the middle class, the explosion of travel and tourism, and the lodging branding revolution sparked in the previous decade. Combined, this has resulted in the greatest real estate construction and infrastructure boom in history.
LE developed the Global Construction Pipeline Report for the lodging, development, investment, and lending industries and for their vendor and supplier communities. It is our hope that they will find added insights to fine-tune their strategic thinking, sharpen their competitive strategies and to identify markets and regions of continuing opportunity, or perhaps of concern, during the challenging times that lie ahead.
LE would like to extend a special thanks to developers around the world who faithfully report their activity to LE, and to hotel company development teams everywhere who so graciously review and verify LE’s research to ensure its accuracy and dependability.
Construction Pipeline Overview, Mid-2008
At the time of publication, a fall-off from these record Pipeline Totals has already started to occur as the credit crisis and economic slowdown have begun to affect developer sentiment. For projects already in the Pipeline, Cancellations and Postponements are on the rise. New Project Announcements into the Pipeline are slowing.
Seeded earlier in the decade, a notably high 4,468 projects, 41% of the Total Pipeline, are already Under Construction. The associated room count is 836,567 or 46% of the Pipeline. These are sure indicators that the Forecast for New Hotel Openings is set to accelerate over the next two and a half years. Guestrooms already Under Construction range from a high of 64% of the Total Pipeline in the Asia Pacific region, to 56% in Europe and Latin America, and to a low of 31% in the United States.
LE’s Three-Year Forecast for New Hotel Openings
The lending crisis has brought a worldwide slowing of the forward migration of Pipeline projects from the Scheduled Starts in the Next 12 Months and Early Planning stages towards Under Construction, as project financing is very difficult to source. This indicates a possible cresting for New Openings in 2010 and a potential peak for the cycle.
Construction Pipeline by Chain Scale
74% of all projects in the Pipeline have already chosen a brand. 2,811 projects are currently labeled as Independents of which approximately 70% will choose a brand prior to opening, representing significant opportunity for global franchise development teams.
6,507 of all branded projects, 82% of the total branded Pipeline, having 835,445 rooms are select service hotels from the Upscale, Mid-Market and Economy chain scales. The combined Mid-Market segments are the largest with 3,527 projects and 386,971 rooms. The Upscale segment is next with 2,103 projects/349,877 rooms followed by Economy with 877 projects/98,597 rooms.
Construction Pipeline by Region
Large, iconic, cutting-edge “starchitect” designs in capital cities, other economic centers and lavish resort destinations are what’s driving the average roject size to lofty levels such as 370 rooms in Dubai, 318 rooms in Abu Dhabi and 261 rooms in China.
Construction Pipeline – Leading Companies
Marriott, with 946 projects/150,873 rooms, has the largest Global Pipeline of Luxury and Upper Upscale projects. Most are world-class, state-of-the-art designs in capitals and other major cities, business and economic hubs and leading resort locations in both older mature countries and emerging economies. JW Marriott, Ritz Carlton, Marriott Hotels and Resorts, Renaissance, and the Upscale Courtyard brands have created Marriot’s worldwide positioning. Many of their development projects also have private residences, as seen with their Marriott Executive Apartments extended-stay label outside the US.
Hilton Hotels has had a global presence for over two generations. Its Global Pipeline has 1,027 projects and 139,201 rooms. After the recent merger between the US-based Hilton Group and Hilton International, their global development strategies have accelerated. Development staffs have been increased to introduce Hilton’s select service brands, Hilton Garden Inn and Hampton Inn, globally. Doubletree has also been launched worldwide, primarily as a high-end conversion brand.
To view the entire Executive Summary for LE’s Global Construction Pipeline Report, including the Forecast for New Hotel Openings and timely trend line graphics, please click here.
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