Retrenchment May Slow Hotel Openings After 2010: Lodging Econometrics

After a record boom in hotel openings through 2010, the global hotel pipeline may diminish dramatically as the financial crisis catches up with the industry, according to projections by Lodging Econometrics. By mid-year 2008, the global development pipeline had reached 10,781 projects representing more than 1.8 million keys. That marks a 28 percent jump from mid-2007, when the pipeline stood at 8,398 projects and about 1.4 million keys. Lodging Econometrics’ tally count hotels under construction, expected to start construction in the next 12 months, and projects in early planning. Developers are currently building 4,468 projects and 836,567 keys. Construction is scheduled to start on 3,819 new hotels by mid-2009, and another 2,494 hotels are in the early planning stages. As a result of this robust activity, a total of 5,817 new hotels are expected to open their doors in 2009 and 2010. The global inventory will grow by 482,083 in 2010 alone. Even as hotels sprout in record numbers, however, Lodging Econometrics cautions that clouds are forming on the horizon. The challenging financing climate is slowing down project announcements and forcing sponsors to postpone or cancel a growing number of developments. If that trend continues, the firm projects a significant drop in openings after 2010. Other highlights of the report:• Largest planning/construction pipeline: United States, 5,883 projects/785,547 keys (43 percent of the global total) • Pipelines outside the U.S.: Asia-Pacific (2,226 projects), Europe (1,022), Middle East (556), South America/Central America/Caribbean (670), Africa (170) • Most keys under construction by region: Asia (325,536) • Largest average project size by region: Middle East, 295 keys per hotel • Average number of keys per hotel project in Dubai: 370 • Average number of keys per hotel project in China: 261 • Largest company pipeline: InterContinental Hotels Group, 1,645 projects/218,219 keys • Largest luxury pipeline: Marriott International Inc., 946 projects/150,873 keys • Percent of projects in the global pipeline committed to a brand: 74 • Percent of 2,811 independent projects that will choose a brand before opening: 70