Construction of new hotels in decline in Europe and the Middle East
In Europe, the total Construction Pipeline (Lodging Econometrics) at year-end 2013 stood at 734 projects/126,249 rooms, down 5% and 1% respectively from year-end 2012. Pipeline growth has been sluggish as widespread austerity measures have slowed the region’s overall economic recovery. Many countries reported, however, that 4th Quarter economic activity was the highest in three years.
In Europe, new hotel openings coming online (new supply) will continue to trend downward, falling below the 2013 mark of 221 Hotels/30,062 Rooms. LE’s forecast calls for a new low of 211 hotel openings in both 2014 and 2015. Room counts will be higher as a number of larger hotels are scheduled to open.
The Middle East total Pipeline stands at 276 Projects/77,972 Rooms, down 14% and 16% respectively Year-Over-Year (YOY). Pipeline trends have been in continuous decline since the peak in 2007. The region was heavily impacted by the global financial crisis as lending dried up and the real estate bubble burst. As a result, the region is still “absorbing” prior Hotel Openings.
The countries with the largest Pipelines are the United Kingdom 157 Projects/21,901 rooms, Russia 114 / 23,988, Germany 96 /17,997, Turkey 63/12,282 and Spain 47/6,535. These five countries account for 447, or 61%, of the 734 Pipeline projects throughout Europe. London with 36 projects, Moscow 33, Istanbul 29, Hamburg 23 and Berlin with 19 have the largest market Pipelines. Pipeline growth in both Russia and Turkey may slow considerably as some projects may cancel and others stall in the near future.