New report reveals that hotel pipeline activity is down globally, except in the Americas
The global hotel development pipeline is showing signs of cooling, with most regions experiencing a decline in new projects compared to last year, according to data from CoStar, a leading real estate data provider. The Americas, however, stands out as the lone bright spot, with construction activity increasing across all stages of development.
CoStar’s March 2024 report reveals a slowdown in most major hotel markets. Europe saw a significant drop in rooms under contract, down 8.8% year-over-year, driven by declines in both construction and pre-construction phases. The Asia Pacific region, while still showing positive construction growth, experienced a slowdown in the planning stages. Similarly, the Middle East and Africa saw a decrease in activity across all development phases.
“The global economic climate is likely playing a role in the cautious approach to new hotel development,” noted, the report, “Rising interest rates and inflation may be leading investors to take a wait-and-see approach before committing to new projects.”
The Americas stand in stark contrast to the global trend. The region boasts a 16.9% year-over-year increase in total rooms under contract, with strong growth across all development stages. The United States leads the region in construction activity, followed by Mexico, Canada, and Brazil.
According to the report, “The continued strength of the U.S. economy and a rebound in travel demand could be fueling the positive outlook in the Americas. This suggests investors remain optimistic about the long-term prospects for the hotel industry in this region.”
While the Americas show promise, the overall slowdown in global hotel development highlights a cautious approach from investors in the face of economic uncertainty. It remains to be seen whether this trend will persist or if a resurgence in activity is on the horizon.
Europe
In construction: 172,499 rooms (-6.8%)
Final Planning: 99,744 rooms (-25.3%)
Planning: 160,404 rooms (+3.1%)
Total Under Contract: 432,647 rooms (-8.8%)
Among countries in the region, Germany (28,500) led in construction activity, closely followed by the U.K. (28,423).
Asia Pacific
In construction: 502,610 rooms (+5.6%)
Final Planning: 109,926 rooms (+5.6%)
Planning: 289,041 rooms (-11.0%)
Total Under Contract: 901,577 rooms (-0.4%)
China leads the Asia Pacific region in total rooms in construction (315,145), followed by Vietnam (37,113).
Middle East & Africa
In construction: 110,783 rooms (-7.3%)
Final Planning: 36,173 rooms (-20.9%)
Planning: 81,316 rooms (-3.3%)
Total Under Contract: 228,272 rooms (-8.5%)
Most of the region’s pipeline activity is focused in the Middle East. Saudi Arabia (42,464) and the United Arab Emirates (19,046) have the most rooms in construction.
Americas
In construction: 205,998 rooms (+4.1%)
Final Planning: 296,374 rooms (+6.8%)
Planning: 378,628 rooms (+36.0%)
Total Under Contract: 881,000 rooms (+16.9%)
The U.S. (156,525) holds the majority of rooms in construction in the region. After the U.S., Mexico (13,335), Canada (7,603) and Brazil (5,799) show the highest number of rooms in construction.
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