The first day of June has seen a fragmented opening of the EU countries lockdown restrictions eased in a number of European countries. People from Italy to Switzerland are flocking to parks, restaurants, museums and bars for the first time in months. The countries all vary, from full to some restrictions. The European Union’s external frontier remains closed until further notice, but a decision is expected by June 15.
This means that some of those key stalled construction projects in Europe can now be kickstarted once again. AND by some estimates there is a long pipeline of such projects and growing.
Lodging Econometrics (LE) analysts have announced that the pipeline of Europe’s hotel building industry grew to almost record rates at the end of the first quarter of 2020, at 1840 projects and 294,047 rooms; 10% more projects, 15% more rooms yearly.
Construction companies comprise 878 projects with an all-time high of 142,185 rooms, and, for the next 12 months, there will be 522 plans with 82,229 large record rooms under construction. The Early Planing initiatives have 440 projects/69,633 rooms, respectively, significantly up 27% and 44%, year-by-year. Europe opened 84 new hotels with 10,469 rooms in the first quarter of 2020.
With 342 projects with 52,231 all-time heights, the UK leads its construction pipeline, and Germany subsequently manages 323 projects/58,935 spaces. With 172 projects/21,070 areas, France follows. Next, there will be 120 projects with 13,049 rooms, followed by 92 projects/14,529 rooms for Poland.
London has 96 projects, and an all-time elevation of 18,055 rooms, Dusseldorf with 58 projects/11,290 rooms and Paris with 39 projects/6,108 rooms are the largest cities in Europe. Next is Hamburg, with 34 projects/7.294 rooms and 33 projects/3.116 rooms in Lisbon.
Accor Hotels has the highest European portfolio of 238 projects/32,763 rooms, and Marriott International is closely followed by 227 projects/37,764 rooms. Next to this Hilton Worldwide and the Intercontinental Hotel Group (IHG), with an all-time high of 195 projects/30,289 rooms and 160 project/25,632 rooms. Forty-five percent of all European pipeline projects represent these four worldwide franchise companies.
The top brands of these four companies include Ibis brands from Accor Hotel with 108 projects/13,779 rooms, then hotels from Novotel and Mercure with 25 projects/3,890 rooms and 25 projects/3,177 rooms, respectively. Top brands from Marriott International are Moxy with a total of 75 project rooms/13.386 rooms and a courtyard by Marriott with 28 project rooms/4.892 and a collection of autographs with 20 projects and 1,909 rooms all-time.
Hampton led Hilton Worldwide from Hilton, which has 81,2736 rooms, 42 projects/7,093, and Hilton DoubleTree, with a total all-time high of 28 projects, with 3,354 rooms. Hilton Worldwide has a total of 81 projects/ 12,736. The top IHG brands include the 70 projects/10,844 rooms Holiday Inn Express, the 31 projects/7,196 rooms Holiday Inn and the 16 projects/1,661 rooms Hotel Indigo.
Like other pipelines worldwide, the European hotel construction pipeline is temporarily delayed by about 2-4 months. Building hotels across the area differs from country to country; some countries have started building while others wait until precautionary steps, directives, and starting days are directed.
Countries across Europe plan to reopen existing hotels safely, in a phased approach which will further enhance and grow the ever-increasing construction projects pipelines.
USA Builders block
Although construction pipeline is for new hotel projects is healthy in USA, there, maybe a decline that could last well into the foreseeable future. As he pandemic did its rounds from one end of the globe to another, shutting properties in several countries, USA hotel room construction continued at neck breaking speed peaking sometime in April, as per STR, when the number increased to 220,000 rooms around the country in varying projects, from 2-5 star category, including lodges and chalets. However, this is predicted to slow down tremendously in the coming months, as the slow effect of the corona virus take a delayed effect in this sector.
According to SKIFT, while occupancy and daily rates may show signs they have bottomed out, construction projects will take longer to bounce back from the inevitable decline – they must bottom before they can rise again. This has been a predictable pattern in past crisis as well one example being 2008 financial crisis rooms under construction peaked at 211,000 — before the mega decline spread over 3.5 years to the lowest point in May 2011 of 50,000 rooms.
Meanwhile before the hotel construction pipelines start to cool off May and Juen could be record months to peak. Although there have been fewer cancelled projects, there have been several deferments, wait and see policies from builders and investors alike. Lenders are hesitant and holding onto preliminary renderings in some case, trying to wait and see approach, going from planning stage to ‘stalled indefinitely’ – deferrals is the less risky road for now.
However, with USA elections round the corner, and the undercurrents of BLM protests being felt far and wide in USA major cities, or it just could be another equally impactful and dramatic event that could dramatically, alter the USA investment mood, with corona being a distant inconvenient blimp in USA economic curve.
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Sumaira IsaacsCEO, Global Tourism Forum
