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By Barbra Murray
According to Lodging Econometrics' latest report on Europe, the Middle East, and Africa, worldwide economic turmoil, unsurprisingly, continues to squeeze the region's hotel construction pipeline.
As is the case in the U.S., financing for hotel development in EMEA remains incredibly difficult to obtain. Using the market's second quarter 2008 cyclical peak as a measuring stick, the report's numbers tell the story of a presently lackluster construction pipeline; a pipeline that encompasses projects actually under construction, those that will commence construction within 12 months, and those that are in the early planning stages. At the close of the first quarter of 2009, the pipeline of construction projects in Europe consisted of 912 hotels with an aggregate 153,189 guestrooms, marking an 11 percent decline from the Q2 2008 peak.
The decrease in the hotel construction pipeline from the Q2 2008 cyclical peak was a tad more severe for the Middle East, where the drop in the number of guestrooms in the works was 13 percent. Africa, on the other hand, was not as hard hit; the decline in the number of guestrooms in the pipeline was 4 percent.
With the credit market still out of reach for most developers, hotel properties that should have moved into the construction start phase have either been delayed or confined to the early planning phase. In the first quarter of this year, 116 projects throughout EMEA were delayed or called off altogether. Most of the damage was done in Europe, where 78 hotels accounting for 12,120 guestrooms were abandoned or postponed; construction activity had already commenced for 36 of those projects. However, when taking the "glass is half full" approach, EMEA's number of canceled and postponed projects has decreased considerably quarter-over-quarter, going from 37,470 in the fourth quarter of 2008 to 21,446 in the first quarter of 2009.
Despite the rather glum state of affairs in the hospitality industry across EMEA today, it seems tomorrow presents a different set of circumstances; a significant increase in hotel completions is on tap. With any luck, the highly anticipated global economic turnaround—which would unleash currently stifled business and leisure travel—will take place in sync with the rebound in new guestrooms expected to come online in the coming years. As per Lodging Econometrics' report, in 2010, 47,464 guestrooms are on target to debut in Europe in 2010, marking not only a new high, but also an increase in deliveries compared to the 10 percent decrease between 2008 and 2009. In the Middle East and Africa, a jump in new guestrooms is also anticipated for the coming years. About 31,725 rooms will open in the Middle East in 2010, compared to 25,829 this year, and 10,072 will debut in Africa next year, compared to 8,864 this year. The acceleration of deliveries in the Middle East and Africa is expected to continue in 2011.
—Nielsen Business Media
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Lodging Econometrics: EMEA Hotel Construction Pipeline Continues Downswing
Aug 14, 2009By Barbra Murray
According to Lodging Econometrics' latest report on Europe, the Middle East, and Africa, worldwide economic turmoil, unsurprisingly, continues to squeeze the region's hotel construction pipeline.
As is the case in the U.S., financing for hotel development in EMEA remains incredibly difficult to obtain. Using the market's second quarter 2008 cyclical peak as a measuring stick, the report's numbers tell the story of a presently lackluster construction pipeline; a pipeline that encompasses projects actually under construction, those that will commence construction within 12 months, and those that are in the early planning stages. At the close of the first quarter of 2009, the pipeline of construction projects in Europe consisted of 912 hotels with an aggregate 153,189 guestrooms, marking an 11 percent decline from the Q2 2008 peak.
The decrease in the hotel construction pipeline from the Q2 2008 cyclical peak was a tad more severe for the Middle East, where the drop in the number of guestrooms in the works was 13 percent. Africa, on the other hand, was not as hard hit; the decline in the number of guestrooms in the pipeline was 4 percent.
With the credit market still out of reach for most developers, hotel properties that should have moved into the construction start phase have either been delayed or confined to the early planning phase. In the first quarter of this year, 116 projects throughout EMEA were delayed or called off altogether. Most of the damage was done in Europe, where 78 hotels accounting for 12,120 guestrooms were abandoned or postponed; construction activity had already commenced for 36 of those projects. However, when taking the "glass is half full" approach, EMEA's number of canceled and postponed projects has decreased considerably quarter-over-quarter, going from 37,470 in the fourth quarter of 2008 to 21,446 in the first quarter of 2009.
Despite the rather glum state of affairs in the hospitality industry across EMEA today, it seems tomorrow presents a different set of circumstances; a significant increase in hotel completions is on tap. With any luck, the highly anticipated global economic turnaround—which would unleash currently stifled business and leisure travel—will take place in sync with the rebound in new guestrooms expected to come online in the coming years. As per Lodging Econometrics' report, in 2010, 47,464 guestrooms are on target to debut in Europe in 2010, marking not only a new high, but also an increase in deliveries compared to the 10 percent decrease between 2008 and 2009. In the Middle East and Africa, a jump in new guestrooms is also anticipated for the coming years. About 31,725 rooms will open in the Middle East in 2010, compared to 25,829 this year, and 10,072 will debut in Africa next year, compared to 8,864 this year. The acceleration of deliveries in the Middle East and Africa is expected to continue in 2011.
—Nielsen Business Media
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