03 Sep 2014
September 3, 2014

2Q2014 EMEA Executive Summary

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SUMMER
2014
Europe, Middle East & Africa
Lodging Real Estate Trends – Executive Summary

Europe’s Construction Pipeline Sluggish As Development In The Middle East Picks Up.

At the end of Q2 Europe’s Construction Pipeline stood at 807 Projects/ 132,187 Rooms, a scant Year-Over-Year (YOY) increase of 8% by Projects and 1% by Rooms. Overall Pipeline growth has been lackluster since the cyclical bottom established in 2010. Both Projects Under Construction and Annualized Construction Starts experienced a brief peak in Q3 2012 when projects previously stalled in the Pipeline during the Great Recession migrated forward towards construction as lending first became available. However, since that peak, both metrics have trended downward for seven consecutive quarters.

Pipeline growth is in the Scheduled to Start in the Next 12 Months and Early Planning stages, where New Project Announcements (NPA’s) traditionally enter the Pipeline. NPA’s had previously been in decline, but have rebounded modestly in the last two quarters as hotel operating statistics continued to strengthen.

Eurozone economic statistics in the 2nd quarter were alarmingly poor, generating great concern throughout the continent. The stalwart economies of Germany and France faltered. Italy even fell back into recession. Recent improvements shown in the troubled economies of Greece, Spain and Portugal also cooled. Amidst growing consumer impatience and political unrest, appeals grow daily for a softening of imposed austerity measures and for greater
stimulus by the central bank. The possibility of tipping over into a third recession within the past five years raises concern, a potential precursor to a long period of malaise punctuated with high unemployment and little economic growth.

The United Kingdom accounts for 25% of the European Pipeline with 202 Projects. Other countries of note are: Russia with 109 Projects, Germany with 98 and Turkey with 67. These four countries account for 59% of Europe’s modest Pipeline.

The Middle East has 327 Projects/ 87,611 Rooms in the Construction Pipeline with YOY gains of 18% by Projects and 8% by Rooms. Projects Under Construction showed a small gain YOY, 7% by Projects and 6% by Rooms, while projects Scheduled to Start in the Next 12 Months have increased 40% by Projects but just 13% by Rooms. Similarly, projects in Early Planning are up 35% by Projects and only 10% by Rooms. The average size hotel in the Pipeline has decreased YOY from 291 rooms to 267, a trend likely to continue throughout the next leg of the cycle.

Now that the region has weathered its financial crisis, many global Hotel Companies have set their sights on the next development boom, sensing great opportunity ahead as Hotel Operating Statistics have rebounded and could soon reach previous peaks.

Several other factors are influencing development in the region. Dubai will host the World Expo in 2020. The World Cup Soccer Tournament is scheduled for Qatar in 2022. The region is also becoming a major airline hub with such fast growing airlines as Saudi Arabian Airlines, Emirates Airline in Dubai, Etihad Airways in Abu Dhabi and Qatar Airways. All are vying to become the airline of choice for long-haul passengers traveling to and from major global markets in the East and West.

Saudi Arabia has the largest Pipeline in the Middle East with 105 Projects followed by the United Arab Emirates with 95 Projects, 54 of which are in Dubai and 21 in Abu Dhabi. Qatar has 33 projects and Oman 23. These four developed countries account for 256 or 78% of the 327 Pipeline projects in the Middle East.

LE Releases Its 2016 Forecast For New Hotel Openings
For the first time, LE released its 2016 forecast for New Supply along with its revised estimates for 2014-15.

In Europe, the 2014 forecast will see 235 New Hotels/ 39,178 Rooms come online. Many of these Projects were previously stalled in the Pipeline and got underway in 2012. Reflecting current trends, New Supply will then fall to 34,000 rooms in 2015-16.

For the Middle East, beginning in 2016 LE expects a greater number of hotels to open, as those Projects that are currently Scheduled to Start in the Next 12 Months and those in the Early Planning stages begin to exit the Pipeline as New Supply. New Openings will accelerate even further as an increasing flow of NPA’s are expected to enter the Pipeline well into late decade.

Order the complete Europe, Middle East and Africa construction pipeline trend report
or a market trend report for a for any individual market.

LE’s Construction Pipeline Trend Report for Europe, Middle East and Africa presents an unmatched review of lodging real estate and development activity. Ideal for monitoring development growth trends, the report contains current and comprehensive views of the Construction Pipeline by Project Stage (Early Planning, Scheduled to Start in the Next 12 Months, Under Construction), LE’s Proprietary Three-Year Forecast for New Hotel Openings, current counts for Open & Operating Hotels (Census) and New Hotel Openings for the previous two years.

An LE Market Trend Report for any Individual Market will supply you with every lodging real estate fact needed about a particular market. Reports provide a summary of the Construction Pipeline as well as contain individual Hotel Records with full details on New Construction Projects, Brand Conversions, Announced Renovations, and Open & Operating Hotels (Census).

To order annual subscriptions to LE’s Quarterly Construction Pipeline Trend Reports for Europe, the Middle East and Africa, or for any particular country in these regions, please call us at +1 603-431-8740, ext. 25 or email info@lodgingeconometrics.com for more information.