Global Pipeline Off 16% Since Peak
Lodging Econometrics (LE)
Nearly 80% of the world’s projects are sized 200 rooms or less. Approxi¬mately 36% of total branded projects are in the Midscale without Food & Beverage segment, with another 26% being Upscale. Unbranded or Inde¬pendent development totaled 2,145 projects/428,775 rooms. It is expected that 75% of those projects will make branding decisions prior to opening, especially as projects with global brands are somewhat easier to finance.
KEY PIPELINE METRICS
At 656 projects/98,574 rooms, Construction Starts are continuing the downward trend that started in Q1 2008. The lack of available financing is slowing forward migra¬tion up the Pipeline towards construction. Projects are stalled in the Scheduled Starts and Early Planning stages, or are being put on hold or are cancelled. Construction Starts have shown the largest declines in the US, Europe and Middle Eastern regions.
Globally, Cancellations/Postponements rose for a fifth consecutive quarter to a total of 975 projects/158,873 rooms in Q1 2009. A sizeable proportion of these projects were larger-sized and in the Luxury, Upper Upscale and Casino chain scales, as such projects are currently the most difficult to finance. Out of the 975 cancelled/postponed projects, a surprisingly high 225 projects, or 23%, were already Under Construction. The percentage of Cancellations/Postponements Under Construction in the United States (11%) and Canada (13%) were lowest. In Latin America, EMEA and Asia Pacific, the percentages were much higher, ranging from 33-48%. Worldwide tightening of credit markets, the growing financial distress of some borrowers and the decline in guestroom demand causing a fall off in occupancy and room rates have all contributed to the rapid undermining of individual project viability in many markets.
New Project Announcements (NPAs) into the Pipeline, at 885 projects/130,334 rooms in Q1 2009, continue to be at trend-line lows around the world. This lower bot¬toming channel is expected to continue until there’s a bounce back from the recession and normal lending activity resumes.
FORECAST FOR NEW HOTEL OPENINGS
New Hotel Openings are now in the midst of a three-year topping out formation that will carry through 2010. A total of 542 new hotels/74,171 rooms opened globally in Q1 2009. LE’s Forecast for New Hotel Openings for 2009 calls for a total of 2,774 hotels/ 398,391 rooms to open as New Supply. 41% of these new guest rooms will be in the United States and 24% in the People’s Republic of China.
A further 2,428 hotels/410,500 rooms are scheduled to open in 2010. The increase in the number of rooms opening is due to a high number of large-sized hotels scheduled to open throughout China for Expo 2010 in Shanghai, as well as a final surge of large hotels set to open in European markets and throughout the Middle East region.
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