Lodging Econometrics: Global Hotel Construction Pipeline Updates

London
London

Lodging Econometrics (LE) has released global hotel construction pipeline data for different regions throughout the world. While China’s pipeline continued an upward trend in Q2 2021, other regions have experienced slight dips in both year-over-year (YOY) and Q2 2021 growth. LE also previously reported that New York City leads the U.S. construction pipeline.

Updated on August 18, 2021.

Europe

According to the latest Europe Hotel Construction Pipeline Trend Report, research analysts report that at the close of the second quarter of 2021, Europe’s hotel construction pipeline dropped 1 percent by projects and increased 1 percent by rooms YOY and ended the quarter with 1,841 projects and 296,843 rooms.

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Projects under construction are up 1 percent YOY, standing at 934 projects/152,549 rooms. Projects scheduled to start construction in the next 12 months saw a small decrease last quarter, closing at 466 projects/73,739 rooms. Projects in the early planning stage dropped 2 percent by projects YOY to 441 projects while rooms increased 1 percent YOY to 70,561 rooms.

Over the past 18 months, closed borders and the absence of tourism have been a great upset for many European economies. Like the rest of the world, countries in the region are still combating the COVID-19 virus and its variants. However, many are starting to show signs of recovery. The advancement of vaccination programs has enabled many European countries to ease restrictions and now open their borders, each with its own conditions for domestic and/or international visitors. Those that have opened have already seen increases in hotel and flight reservations. Pent-up demand has tourists eager to make plans for late summer. As long as the COVID-19 situation improves, or at a minimum, remains stable in the region and restrictions continue to ease, travel demand is expected to strengthen during the second half of 2021.

The United Kingdom leads the construction pipeline with 345 projects/52,925 rooms. Germany is second with 276 projects/50,304 rooms. France follows with 169 projects/19,948 rooms. Next is Portugal with 120 projects/14,510 rooms, and then Poland with 94 projects/14,074 rooms.

The markets in Europe with the most projects in the pipeline are London with 86 projects/15,717 rooms, Dusseldorf at 52 projects/10,370 rooms, and Paris at 44 projects/6,927 rooms. Next is Lisbon with 35 projects and a room count total of 4,130 and Istanbul follows with 33 projects/6,472 rooms.

China

The total China construction pipeline stands at 3,454 projects/661,043 rooms. At the end of the second quarter, the 2021 construction pipeline is up 2 percent by rooms YOY and just below the region’s all-time high project count of 3,574 projects/647,704 rooms set in the second quarter of 2020. This is the fourth consecutive quarter China’s pipeline has increased.

China currently has 2,401 projects/437,731 rooms under construction, up 5 percent by projects and 7 percent by rooms YOY, while projects scheduled to start construction in the next 12 months are down 6 percent by projects and 11 percent by rooms, standing at 556 projects/103,958 rooms. Projects in the early planning stage are at an all-time high, up 10 percent by projects and 12 percent by rooms YOY and standing at 497 projects/119,354 rooms at the end of Q2 2021. The increases in projects in the under construction and early planning stages can be attributed to a record number of new upper upscale, upscale, and upper midscale projects recorded during Q2 2021. According to LE’s market intelligence team, previously delayed projects that have been on hold over the past year, due to COVID-19, are now advancing and expected to increase over the next few quarters as construction in China resumes.

Chengdu leads China’s pipeline at the end of Q2 2021 with 138 projects, a record-high number of projects, having 28,009 rooms. Shanghai follows with 123 projects/23,891 rooms. Next is Guangzhou, standing at 121 projects/24,836 rooms, then Wuhan with 101 projects/14,064 rooms, and Xi’an with 93 projects/16,395 rooms.

The three top franchise companies in China’s construction pipeline reached record highs during the second quarter. Hilton Worldwide hit a record-high of 634 projects as well as a record-high count of 120,697 rooms; IHG also reached a record-high of 444 projects, accounting for 92,342 rooms; and Marriott International saw an all-time high of 394 projects/105,961 rooms. Next is JinJiang Holdings, with 218 projects/21,394 rooms, and Accor with 183 projects/32,839 rooms. These five companies make up 54 percent of projects and 56 percent of rooms in China’s total hotel construction pipeline.

Asia Pacific

According to the recent Asia Pacific, excluding China, Hotel Construction Pipeline Trend Report, the region’s total construction pipeline dropped to 1,701 projects/364,487 rooms, down 11% by projects and 10% by rooms, year-over-year (YOY). At the end of the second quarter, the region has 852 projects with 195,940 rooms under construction. Projects scheduled to start construction in the next 12 months stand at 390 projects/73,447 rooms and projects in the early planning stage stand at 459 projects/95,100 rooms.

Countries in the Asia Pacific region continue to face the on-going effects of the COVID-19 pandemic to varying degrees. Some border closures and other travel restrictions have had a significant impact on the region’s economies, which rely heavily on tourism. While breakouts, emerging variants, and slow-to-rollout vaccines have prolonged the road to recovery for many countries in the region, there are positive signs for the industry’s recovery and post-pandemic future, as many developers are optimistic and ready to move forward with long-delayed plans.

Countries with the largest pipelines in the Asia Pacific region, excluding China, are led by Indonesia, with 318 projects/51,197 rooms. India follows with 282 projects/37,617 rooms, then Vietnam with 180 projects/70,135 rooms. Next are Thailand with 135 projects/32,135 rooms and Japan with 133 projects/27,567 rooms. These five countries account for 62 percent of the pipeline projects in the Asia Pacific region, excluding China.

Asia Pacific markets with the largest construction pipelines are led by Jakarta, Indonesia with 71 projects/12,376 rooms. Next is Seoul, South Korea, with 63 projects/12,300 rooms, and Bangkok, Thailand with 48 projects/12,033 rooms. Kuala Lumpur, Malaysia follows with 45 projects/13,406 rooms, and Phuket, Thailand with 30 projects/6,637 rooms.

Canada

At the close of the second quarter, analysts report that the total construction pipeline in Canada stands at 253 projects/33,240 rooms, down 43 projects or 15 percent by projects YOY.

While several pandemic waves have slowed Canada’s economic growth in the first half of 2021, the country’s finance department predicts the economy will pick up in the third quarter. As more Canadians become fully vaccinated, more regions have reopened or are considering reopening. Currently, about two-thirds of Canadians are fully or partially vaccinated. As restrictions continue easing, pent-up consumer demand will help to establish some semblance of normalcy. Travel and the hospitality sector are expected to benefit as well.

Projects under construction stand at 71 projects/9,218 rooms, down 28 percent by projects and 25 percent by rooms YOY. Projects scheduled to start construction in the next 12 months are at 74 projects/8,645 rooms. Early planning has the most substantial shift in projects YOY, reaching a cyclical peak project count number and showing a 19 percent increase by projects to end the second quarter with 108 total projects/15,377 rooms. This increase in early planning is typical following an economic slowdown as developers are eager to move from the drawing board into the permitting phase.

Ontario continues to lead Canada’s construction pipeline, standing at 146 projects/17,799 rooms at the end of Q2 2021 and accounts for 58 percent of the projects in Canada’s total pipeline. British Columbia follows with 37 projects/5,806 rooms, and then Alberta with 23 projects/3,797 rooms, Quebec with 22 projects/3,166 rooms, and Nova Scotia with 8 projects/868 rooms. Collectively, these five provinces account for 93 percent of the rooms in the country’s total construction pipeline.

Middle East

According to the latest Construction Pipeline Trend Report for the Middle East, research analysts state at the end of Q2 2021, the hotel construction pipeline in the Middle East declined once again to 531 projects/152,448 rooms. The Middle East’s pipeline is down 10 percent by both projects and rooms YOY. This is the eighth consecutive quarter the pipeline has declined since reaching its cyclical peak of 638 projects in Q2 2019.

Projects currently under construction dropped 6 percent by projects and 8 percent by rooms YOY, standing at 340 projects/107,537 rooms, down 23 projects from the peak of the under construction stage in the Middle East, which occurred in Q2 2020. Projects scheduled to start construction in the next 12 months ended the second quarter at 81 projects/19,515 rooms. Projects in the early planning stage are at 110 projects/25,396 rooms, dipping 8 percent by projects and 4 percent by rooms YOY.

Countries with the most projects in the construction pipeline are Saudi Arabia with 187 projects/67,193 rooms and the United Arab Emirates with 149 projects/41,232 rooms. Following distantly is Egypt with a record high project count of 66 and 15,961 rooms, then Qatar with 57 projects/13,719 rooms, and Oman with 31 projects/6,560 rooms. Dubai continues to lead the construction pipeline in the United Arab Emirates with 111 projects/31,901 rooms.

Regions and cities with the largest hotel construction pipelines are Saudi Arabia’s Provincial region with 56 projects/12,115 rooms; Riyadh, Saudi Arabia with 55 projects/11,271 rooms; Doha, Qatar with 49 projects/11,513 rooms; Jeddah, Saudi Arabia, with 42 projects/8,672 rooms; and Makkah, Saudi Arabia with 34 projects/35,135 rooms. Forty-four percent of the projects in the construction pipeline in the Middle East are found within these five cities.

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