07 Apr 2014
April 7, 2014

4Q2013 EMEA Executive Summary

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

Construction Pipeline Declines Further in Europe and the Middle East.

In Europe, the total Construction Pipeline 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.

The economic recovery still remains fragile. Europe will need to make even further adjustments to mitigate new financial headwinds caused by the US Federal Reserve’s tempering of its quantitative easing program and the economic uneasiness caused by Russia’s expansionary forays into Eastern Europe.

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. Previously stalled projects in the Pipeline are now moving through the Pipeline toward construction and eventual completion, but the prospect of any surge in New Project Announcements entering into the Pipeline remains distant as further declines in the Pipeline are expected into 2015.

European Pipeline Struggles to Move Forward
Europe’s Total Pipeline remains locked in a bottoming formation. Projects from the last real-estate cycle caused projects Under Construction to peak in late Q2 2012 before tumbling for six consecutive quarters. Project Starts and New Project Announcements into the Pipeline are at the lowest levels LE has recorded since beginning to monitor European development in 2007. This means that 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 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. Capital outflows have risen sharply in Russia in response to the country’s aggression in the Ukraine and in Turkey because of the political unrest. Both economies are slowing, causing investors to become skittish.

Five franchise companies account for 361 projects, nearly 50% of all projects in Europe’s Pipeline. Hilton International has the largest and fastest growing Pipeline with 20% of all projects (143 out of 734). With the completion of these Pipeline projects Hilton’s count of Open and Operating Hotels will expand by 53% in the region. Hilton’s Hampton Inn has 49 projects in the Pipeline and Hilton Garden Inn is close behind with 48 projects, the largest totals of any brand by far.

Middle East Pipeline Metrics Decline Precipitously
Today the Middle East Pipeline is at a six-year low and is down nearly 50% from its peak. All chain scale categories and Pipeline stages, Early Planning, Starts in the Next 12 Months, and Under Construction, hit lows in 2013. New Hotel Openings were also at lows.

Saudi Arabia has the largest Pipeline by far, with 83 Projects/24,405 Rooms, followed by Dubai 42 /12,145, Qatar 24/6,181, Oman 23/4,610 and Abu Dhabi 21/6,823. Together these five countries account for 193 projects, a whopping 70% of the Middle East Pipeline. Of the global franchise companies, Hilton has 48 projects, Starwood 31, Marriot 22, IHG 20 and Accor 16, totaling 137 projects and 50% of the Middle East Pipeline. Hilton International has the top two brands with its full-service Hilton brand at 21 projects and its Doubletree label with 16.

Order construction pipeline trend reports for these regions & countries.
invaluable for strategic planning & development decision-making

LE’s Construction Pipeline Trend Reports encapsulate all lodging development activity, providing hotel project and room counts for the Pipeline by stage (Under Construction, Starts in the Next 12 Months, Early Planning), as well as for LE’s proprietary Three-Year Forecast for New Hotel Openings. Two years of Prior Hotel Openings and current supply counts for Open and Operating Hotels (Census) are also included.

Views with the above metrics are provided by chain scale, property size, for all countries and their leading markets and for global and regional franchise companies and their brands.

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.

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