Finance & DevelopmentDevelopmentLodging Econometrics: Global Hotel Construction Pipeline Updates

Lodging Econometrics: Global Hotel Construction Pipeline Updates

Lodging Econometrics recently released hotel construction pipeline updates from regions across the globe. While every region covered by Lodging Econometrics faces its own challenges, many are showing signs of recovery. And in its recent biannual Global Construction Pipeline Trend Report, Lodging Econometrics reported that the pipeline stands at 5 percent by projects and 2 percent by rooms year-over-year (YOY). The following findings are from recently released reports by region:

United States

According to the United States Construction Pipeline Trend Report from Lodging Econometrics, the total U.S. construction pipeline stands at 5,220 projects/621,268 rooms at the close of 2022’s second quarter, up 9 percent YOY by projects and 4 percent YOY by rooms.

Canada

As seen in the Q2 2022 Canada Construction Pipeline Trend Report from Lodging Econometrics, at the close of the quarter, the total construction pipeline in Canada stands at 261 projects/35,662 rooms, up 3 percent by projects YOY and up 7 percent by rooms YOY.

During the first half of the year, Canada’s tourism and hospitality sector saw an increasing number of domestic and international visitors comparable to those seen since the onset of the pandemic. While larger group demand has been slow to return, smaller group, meetings, and leisure activity are on the upswing in urban areas and popular tourist destinations. As booking and occupancy numbers have increased in these markets, so has the interest of developers and investors.

Currently, there are 59 projects/7,657 rooms under construction in Canada. Projects scheduled to start construction in the next 12 months have the most substantial shift in projects YOY, showing a 32 percent increase with 98 projects/13,707 rooms. Projects in the early planning stage are at 104 projects/14,298 rooms.

In Q2 2022, the top provinces with the most projects in the pipeline are dominated by Ontario at 148 projects and a record-high of 20,539 rooms, which accounts for 57 percent of the projects in Canada’s total pipeline. Next is British Columbia with 42 projects/6,868 rooms and then Alberta with 23 projects/2,125 rooms. Together these three provinces account for 82 percent of the rooms in Canada’s pipeline.

Latin America

According to the Latin America Construction Pipeline Trend Report from Lodging Econometrics, the region’s total construction pipeline has 555 projects/90,496 rooms in Q2 2022.

Following nearly two years of uncertainty stemming from the pandemic, the hotel industry in Latin America is finally showing some signs of recovery. Consumer confidence has risen as border restrictions and quarantine requirements across the region and air passenger traffic to Latin American countries have increased substantially compared to numbers recorded in Q2 2021.

In the first half of 2022, 40 projects/8,481 rooms began construction in the region. New project announcements in Q2 2022 are up 57 percent by projects YOY at 36 projects/6,208 rooms.

In Latin America, there are 254 projects/46,670 rooms presently under construction, projects scheduled to start construction in the next 12 months are at 158 projects/23,371 rooms, and projects in early planning are at 143 projects/20,455 rooms. The early planning stage of the pipeline in Latin America is the only stage with growth, up 43 percent by projects and 26 percent by rooms YOY.

Mexico leads Latin America’s construction pipeline in Q2 with 211 projects/34,509 rooms. Next is Brazil, which stands at 89 projects/14,471 rooms. These two countries account for 67 percent of the projects in the total pipeline. Following Brazil is Peru with 29 projects/3,669 rooms, then the Dominican Republic with 24 projects/5,563 rooms, and then Columbia with 19 projects/2,936 rooms.

Asia Pacific

According to the Asia Pacific, excluding China, Hotel Construction Pipeline Trend Report from Lodging Econometrics, at the end of the second quarter, the region’s total construction pipeline grew to 1,891 projects/396,517 rooms, up 11 percent and 9 percent respectively YOY.

The hotel industry in the Asia Pacific region continued to show signs of recovery in Q2 2022. Countries in the region with lifted border and travel restrictions saw a boom in leisure and business demand with the return of international travelers. At the end of the second quarter, projects currently under construction stand at 958 projects/212,609 rooms, up 12 percent YOY and 9 percent YOY respectively, and projects scheduled to start construction in the next 12 months stand at 337 projects/66,655 rooms. Projects in the early planning stage soared to a record high 596 projects/117,253 rooms, up 30 percent YOY by projects and 23 percent YOY by rooms as investors and developers act upon opportunities to get new projects on the ground and announce new projects. Development activity was most active within the mid-level chain scales, where upscale and midscale projects hit record high project counts of 411 projects/92,424 rooms and 181 projects/28,993 rooms respectively. Conversions and renovation projects also reached record high project and room counts of 173 projects/34,955 rooms in the second quarter.

At the end of Q2 2022, countries with the largest pipelines in Asia Pacific’s construction pipeline, excluding China, are led by India with 339 projects/42,548 rooms. Indonesia follows with 284 projects/45,359 rooms, then Vietnam with 223 projects/80,376 rooms. Next is Thailand with all-time high project and room counts of 178 projects/42,694 rooms, then Japan with 171 projects/36,919 rooms

China

According to the Construction Pipeline Trend Report from Lodging Econometrics, the total China hotel construction pipeline stands at 3,693 projects/701,974 rooms. At the end of Q2 2022, the country’s construction pipeline is slightly less than the all-time high of 3,711 projects/704,101 rooms set in Q1 2022 and is up 7 percent by projects YOY and 6 percent YOY by rooms.

Projects presently under construction are at 2,581 projects/470,021 rooms, each up 7 percent YOY; projects starting construction in the next 12 months are at 510 projects/97,607 rooms; and projects in the early planning stage are at 602 projects/134,346 rooms, up 21 percent and 13 percent YOY, respectively. These increases can be attributed to the record number of upper and upper midscale projects in the pipeline as well as new construction projects coming back online that were previously stalled in 2020 and 2021 due to the COVID-19 pandemic. Despite economic uncertainty and a rocky real estate market, hotel construction in most major cities has resumed and is expected to continue through the end of the year and into 2023.

Chengdu leads China’s pipeline with 141 projects/28,573 rooms. Shanghai follows with 128 projects/25,200 rooms. Next is Guangzhou with 115 projects/25,420 rooms, Hangzhou with 101 projects/21,175 rooms, and Xi’an with 94 projects/17,169 rooms.

Europe

According to the latest Hotel Construction Pipeline Trend Report from Lodging Econometrics, analysts report that at the close of Q2 2022, Europe continues to show steady growth in new hotels opening in 2022, opening 188 new hotels with 28,350 rooms in the first half of the year. Continuing the upward trend in year-end total opens seen in 2020 and 2021, the region is forecast to open another 259 hotels with 36,548 rooms in the next two quarters, for a 2022 year-end forecast total of 447 new hotels/64,898 rooms. The forecast for new hotel openings for the next couple of years expects a total of 421 new hotels/62,281 rooms to open by the end of 2023 and 419 new hotels /64,016 rooms are forecast to open in 2024.

From Q2 2022, Europe’s hotel construction pipeline stands at 1,706 projects and 265,818 rooms. There are 817 projects/131,772 rooms currently under construction in Europe’s hotel construction pipeline and 413 projects/60,397 rooms planning to start construction in the next 12 months. Projects and rooms in the early planning stage are up 8 percent and 4 percent YOY respectively, with 476 projects/73,649 rooms.

The countries leading Europe’s construction pipeline with the most project and room counts in Q2 are the United Kingdom with 309 projects/46,296 rooms, Germany with 258 projects/44,692 rooms, France with 152 projects/17,338 rooms, Portugal with 123 projects/14,811 rooms, and Poland with 85 projects/12,205 rooms. These five countries account for 54 percent of the projects and 51 percent of the rooms in Europe’s total construction pipeline in Q2 2022.

Middle East

In the recent Middle East Hotel Construction Pipeline Trend Report from Lodging Econometrics, at the end of Q2 2022, the total pipeline stands at 545 projects/140,055 rooms, up 3 percent by projects YOY.

Economic and geopolitical uncertainty still pose many challenges throughout the Middle East, but as travel restrictions have been gradually lifted across the region, domestic travel and tourism numbers have improved throughout the first two quarters. For the second consecutive quarter, 72 percent of the projects in the Middle East are in the top three chain scales (luxury, upper upscale, and upscale), with upper-upscale projects reaching record high project counts of 121 projects/31,950 rooms in Q2.

In Q2, projects presently under construction throughout the region stand at 332 projects/91,858 rooms. Projects scheduled to start construction in the next 12 months stand at 87 projects/22,938 rooms, up 7 percent by projects and 18 percent by rooms YOY, and projects in early planning stand at 126 projects/25,259 rooms, up 15 percent by projects YOY.

Countries in the Middle East with the largest number of projects in the construction pipeline in Q2 2022 are Saudi Arabia with 212 projects/60,045 rooms and the United Arab Emirates with 119 projects/33,121 rooms. Sixty-one percent of projects and 67 percent of rooms in the Middle East’s hotel construction pipeline are located within these two countries. Following distantly is Egypt with record high project and room counts of 74 projects/16,569 rooms, then Qatar with an all-time high project count of 66 projects/15,168 rooms, and Oman with 29 projects/6,414 rooms. Dubai continues to lead the construction pipeline in the United Arab Emirates with 81 projects/24,382 rooms.

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