China, India continue to dominate global hotel pipeline

WORLDWIDE China ended September with a hotel development pipeline about three times larger than the next closest country, India. The two emerging economies boast pipelines of 139,700 guestrooms and 47,300 guestrooms, respectively.

The total Asia Pacific pipeline comprises 1,065 hotels totalling about 260,000 guestrooms, according to the September 2010 STR Global Construction Pipeline Report, released this week.

“The Asia Pacific pipeline is dominated by development activity across China and India, which makes up more than two-thirds of the total pipeline,” says Elizabeth Randall, managing director of STR Global. “As two of the BRIC countries, China and India present a huge potential for hotel companies to cater to growing middle classes in these countries and to create awareness and recognition of the hotel brands as they travel internationally. Similar to Russia, we see hotel developments moving into more regional destinations and for more midscale and economy brands to enter these markets”.

At 16,000 guestrooms, Thailand is next closest on the Asia Pacific pipeline list. Broken down by individual markets, the top three are Shanghai (13,600 guestrooms), Bangkok (9,300) and New Delhi (7,000). Half of all guestrooms in the Asia Pacific pipeline fall into the upscale or upper-upscale categories.

The Central and South America hotel pipeline comprises 140 hotels totalling 22,300 guestrooms, dominated by Brazil’s 8,100 guestrooms under development. Panama follows closely behind with 5,700 guestrooms in the total active pipeline.

In the Caribbean and Mexico, the hotel development pipeline sits at 138 hotels totalling 18,300 guestrooms. Mexico reports the largest number of guestrooms in the pipeline, with 11,100, followed by the Dominican Republic (2,000) and Puerto Rico (1,200).

The Europe hotel development pipeline comprises 705 hotels totalling 120,500 guestrooms, nearly half of which are in active construction. Among the region’s countries, the United Kingdom ended the month with the most guestrooms in the total active pipeline (28,700). Germany reports 16,700 guestrooms in the total active pipeline, followed by Russia at 15,600.

“The European pipeline is the smallest, compared to the existing supply, of all the global regions,” Randall says. “We have seen an average of 1.2% increase of supply so far this year, and the pipeline of 705 hotels makes up only 1.4% of the total supply. The maturity of the market and limited land availability are some of the reasons for the smaller pipeline. Despite this, we have seen a continued interest to add new supply in established markets like the United Kingdom and Germany, which have the most upcoming projects, followed by an emerging destination, Russia, which sees more development in secondary markets across the country.”

The Middle East and Africa pipeline comprises 442 hotels totalling 121,400 guestrooms, STR Global reports. Among the key countries in the region, United Arab Emirates dominates the total active pipeline (52,600 guestrooms), followed by Saudi Arabia’s 15,000 guestrooms. “Across MEA we still have the highest development activity of the global regions,” Randall says. “The 442 hotel projects in the September pipeline make up 11.7% of the existing supply, showing the continued interest in the region and the opportunities provided by an existing limited supply offering.

“The governmental support in infrastructure, transport and tourism development and the positive investment climate has continued to boost development in the United Arab Emirates and Saudi Arabia. Africa, Morocco and Egypt are benefiting from the increased development interest as well.”