Lodging Econometrics has released construction pipeline updates from regions across the world. Many of the global regions saw increases in their construction development pipelines but vary in the amount they have grown during Q3 2022.
United States
According to the third quarter Construction Pipeline Trend Report for the United States from Lodging Econometrics, the U.S. construction pipeline stands at 5,317 projects/629,489 rooms, up 10 percent by projects and 6 percent rooms year-over-year (YOY).
At the close of Q3 2022, there are 987 projects/135,050 rooms under construction in the United States. Projects scheduled to start construction in the next 12 months stand at 2,074 projects/236,894 rooms, up 14 percent by projects and 13 percent by rooms YOY, respectively. Project counts in the early planning stage reached record highs, in Q3 2022, standing at 2,256 projects/257,545 rooms, a 14 percent increase by projects and 7 percent increase in rooms YOY.
The lodging industry is healthy, and many hotel owners are expected to experience record-high revenues in 2022. As lending rates have changed significantly due to the Federal Reserve’s rate increases, ownership and management groups are finding that reinvesting in their current portfolios, whether that be renovating or repositioning to another brand, is a better return on investment right now. At the end of Q3 2022, brand conversion room counts reached record highs of 988 projects/99,474 rooms. The renovation pipeline remained strong as well, with 893 projects/140,440 rooms; some of the highest counts dating back to Q3 2018. Combined, renovation and conversion activity accounts for 1,881 projects/239,914 rooms, up 36 percent YOY by projects and 50 percent by rooms YOY.
Canada
According to the recent Hotel Construction Pipeline Report for Canada by Lodging Econometrics, analysts report that in the third quarter of 2022 the total construction pipeline in Canada stands at 263 projects/34,825 rooms, up 2 percent by projects and rooms YOY.
At the Q3 2022 close, projects presently under construction in Canada stand at 54 projects/6,984 rooms. Projects scheduled to start construction in the next 12 months are at 105 projects/14,270 rooms, a 24 percent increase by projects and a 37 percent increase in rooms YOY. Projects in the early planning stage show a slight 2 percent increase with 104 projects/13,571 rooms recorded.
The Bank of Canada recently announced another interest rate increase to bring its policy interest rate to 3.75 percent. Even with this additional increase, building activity remains above pre-pandemic levels as developers continue to move projects forward. In the third quarter, Canada had 20 new project announcements with 1,463 rooms.
Latin America
In the Q3 2022 Latin America Construction Pipeline Trend Report from Lodging Econometrics, analysts report the total construction pipeline stands at 548 projects/90,728 rooms, down 5 percent by projects and 12 percent by rooms YOY.
At the end of the third quarter, projects currently under construction stand at 239 projects/44,837 rooms. Projects scheduled to start construction in the next 12 months are up 6 percent by projects YOY, standing at 165 projects/24,648 rooms, and those in the early planning stage stand at 144 projects/21,243 rooms, up 22 percent and 14 percent respectively.
Five countries in Latin America’s construction pipeline account for 68 percent of the projects in the region. Mexico has the most projects in the pipeline in Q3, with 206 projects/33,761 rooms. Brazil follows with 92 projects/15,420 rooms. Next is Peru with 28 projects/3,610 rooms, then the Dominican Republic with 27 projects/6,262 rooms, and Argentina stands at 18 projects/1,956 rooms.
China
In the recent China Construction Pipeline Trend Report from Lodging Econometrics, analysts report that China’s total hotel construction pipeline, at the close of Q3 2022, stands at 3,604 projects/684,288 rooms, up 1 percent by projects and unchanged by rooms YOY.
Currently, the country has 2,543 projects with 462,132 rooms under construction, with projects scheduled to start construction in the next 12 months at 417 projects with 78,990 rooms. Projects and room counts in the early planning stage reached record highs in the third quarter, up 13 percent by projects and 8 percent by rooms YOY, standing at 644 projects/143,166 rooms. The upscale chain scale hit peak project counts in the third quarter and accounts for 22 percent of projects and 28 percent of the rooms in China’s hotel construction pipeline.
Cities in China with the largest pipelines, at the Q3 close, are Chengdu with 140 projects/28,208 rooms, Shanghai with 126 projects/25,308 rooms, Guangzhou with 115 projects/25,277 rooms, Hangzhou with 98 projects/20,448 rooms, and Xi’an with 95 projects/17,176.
Asia Pacific
According to the recent Q3 2022 close of the Construction Pipeline Trend Report for the Asia Pacific region from Lodging Econometrics, Asia Pacific’s total construction pipeline, excluding China, stands at 1,881 projects/401,545 rooms, up 7 percent by projects and 5 percent by rooms YOY.
At the Q3 close, there are 946 projects/206,629 rooms under construction, up 10 percent by projects YOY. Projects scheduled to start construction in the next 12 months stand at 300 projects/63,221 rooms. Projects in early planning reached peak room counts and closed the quarter at 635 projects/131,695 rooms, up 26 percent by projects and 21 percent by rooms YOY. The luxury and upper upscale chain scales each hit peak project counts at the end of Q3 and account for 27 percent of the projects in the region’s hotel construction pipeline.
Five countries in the Asia Pacific region, excluding China, account for 62 percent of projects in the region’s total pipeline. The countries with the largest hotel construction pipelines at the close of the third quarter are led by India with 352 projects/43,364 rooms. Next is Indonesia with 252 projects/40,821 rooms, then Vietnam with 233 projects/86,847 rooms. These countries are followed by Thailand with 174 projects/42,371 rooms and Japan with 163 projects/35,407 rooms.
Europe
According to the Q3 2022 Europe Hotel Construction Pipeline Trend Report from Lodging Econometrics, analysts report that at the close of the third quarter, Europe’s hotel construction pipeline stands at 1,660 projects/258,476 rooms. Projects under construction in Europe stand at 790 projects/126,899 rooms, while projects planning to start construction in the next 12 months recorded 408 projects/60,085 rooms. Projects in the early planning stage have 462 projects/71,492 rooms.
Travel activity in Europe has been rebounding over recent months and is expected to continue through the end of the year. Business-related travel is on the rise in the region and hotel bookings at resort destinations and major European cities are comparable to those seen in 2019. Reflective of a strong recovery and the growth in travel and hospitality demand, owners and investors have a positive outlook for the industry moving forward.
Hotel conversions in the region stand at an all-time high of 324 hotels/46,977 rooms, a 51 percent and 61 percent YOY increase respectively, and the highest counts ever recorded by Lodging Econometrics. Hotel renovations in Europe are also on the rise with 150 hotels/22,594 rooms at Q3.
Middle East
According to the Q3 2022 Middle East Construction Pipeline Trend Report from Lodging Econometrics, at the end of the quarter, the hotel construction pipeline in the region stands at 535 projects/134,897 rooms.
At the close of the third quarter, projects presently under construction stand at 320 projects/87,149 rooms. Projects scheduled to start construction in the next 12 months are at 87 projects/21,713 rooms, up 12 percent and 16 percent respectively, YOY. Projects in the early planning stage are at 128 projects/26,035 rooms.
The Middle East has the largest average room size for new construction projects in the pipeline of any region in the world, with an average of 252 rooms per project. Seventy-two percent of its pipeline is concentrated in the three highest chain scales: luxury, upper upscale, and upscale, which typically boasts larger scale projects. Of note, Wynn Resorts will open a new hotel on the island of Ras Al Khaimah. The 1,000-room luxury resort is currently in early planning and will be the largest project the region has seen with 10 restaurants, lounges, a spa, a convention facility, retail venues, and possibly a gaming area.
