Europe construction pipeline dips, Middle East rises

According to 2021 year-end Hotel Construction Pipeline Trend Reports by Lodging Econometrics (LE), Europe’s hotel construction pipeline stands at 1,824 projects and 295,152 rooms at the close of the fourth quarter, while the Middle East’s construction pipeline stands at 546 projects and 150,547 rooms.

From 2014 through 2020, Europe’s construction pipeline experienced a steady year-over-year (YOY) increase in project totals. Starting in Q2 2021 and continuing throughout the year, this trend has been reversing with the region’s construction pipeline totals falling slightly below 2019’s year-end totals. This drop in project totals is due to development and opening delays, project cancellations and other project obstacles related to the COVID-19 pandemic, such as supply chain and labor shortages, along with the increased cost of labor and materials.

Nevertheless, with some of the world’s most popular tourist destinations, Europe has seen a swell in domestic and inter-regional travel over the past year. International arrivals to Europe increased nearly 75% YOY. Hotel performance is a significant driver of hotel development and as a result, there is optimism that delayed projects may soon come back online.

At Q4 ‘21, projects under construction stand at 860 projects/142,898 rooms, down 11% by projects and 9% by rooms YOY. Projects scheduled to start construction in the next 12 months stand at 470 projects/72,194 rooms, down 1% by projects and 3% by rooms YOY. Projects and rooms counts in the early planning stage are both up 7% YOY, ending Q4 with a record high of 494 projects accounting for 80,060 rooms, also a record high room count for this stage in the region.

Announced renovation and conversion project and room counts are up at the end of Q4, with a record high of 433 projects/62,368 rooms, up 19% by projects and up 21% by rooms YOY. Conversions at Q4 ‘21 reached a high of 293 projects and 40,088 rooms and renovations closed the quarter standing at 140 projects/22,280 rooms.

The U.K. leads the construction pipeline with project and room counts in Q4 ’21, at 313 projects/48,770 rooms. The U.K. is followed closely by Germany with 277 projects/48,827 rooms, then France with 159 projects/19,003 rooms. Next is Portugal with 119 projects/14,362 rooms and Poland with 85 projects/12,285 rooms.

The cities in Europe with the largest hotel construction pipelines include London with 83 projects/14,768 rooms, Dusseldorf, Germany, with 53 projects/9,999 rooms and Paris at 37 projects/6,036 rooms. Next is Lisbon, Portugal, with 34 projects/3,822 rooms, followed by Istanbul with 31 projects/5,986 rooms.

With record-high counts at the end of the fourth quarter, Accor leads franchise companies in Europe with the largest pipeline by projects, at 300 projects/42,846 rooms. It is followed by Hilton with record-high projects counts for the company of 216 projects accounting for 33,130 rooms. Marriott International is next, with 211 projects/33,353 rooms. Marriott is followed by InterContinental Hotels Group (IHG) with 158 projects/23,486 rooms. These four companies account for 49% of the projects in the total pipeline.

Top brands in Europe at Q4 ‘21 are led by Accor’s Ibis brands with 103 projects/12,505 rooms, then Mercure, at an all-time high project and room count, with 31 projects/4,169 rooms. Hilton’s top brands at Q4 are its Hampton by Hilton brands with 84 projects/12,911 rooms and its Hilton Garden Inn brand with 47 projects/8,005 rooms. Marriott International’s top brands at Q4 are Moxy with 51 projects/8,684 rooms and Courtyard by Marriott with 23 projects/3,959 rooms. IHG’s top brands at Q4 are Holiday Inn Express with 64 projects/9,403 rooms and its Holiday Inn brand with 22 projects/4,403 rooms.

During the fourth quarter of 2021, Europe opened 87 hotels/12,204 rooms, for a total of 427 hotels and a record high of 62,272 rooms in 2021. LE is forecasting another 474 new hotels, accounting for 70,242 rooms, to open in 2022 and another 504 new hotels with 75,015 rooms to open in 2023.

Middle East
Following an eight consecutive quarter downward trend, Q4 ‘21 is the second consecutive quarter project counts have increased in the region.

Projects currently under construction stand at 337 projects/102,821 rooms, a 4% by project and 9% by rooms drop YOY. Projects scheduled to start construction in the next 12 months are up 5% by projects and 20% by rooms YOY to end the fourth quarter at 86 projects/22,987 rooms. Projects in the early planning stage are up 13% YOY and unchanged by rooms YOY at Q4, standing at 123 projects/24,739 rooms.

Countries with the most projects in the construction pipeline are Saudi Arabia with 210 projects/69,078 rooms and the United Arab Emirates with 126 projects/35,666 rooms. Following distantly is Egypt with the highest project count the country has even had at 68 projects/15,152 rooms. Qatar follows, also at a record high in Q4, with 65 projects/15,507 rooms and Oman with 31 projects/6,383 rooms.

Dubai continues to have the largest construction pipeline among cities in the Middle East with 93 projects/27,938 rooms. The Provincial region in Saudi Arabia follows with 69 projects/14,167 rooms, then Riyadh, Saudi Arabia, with record project and room counts, to stand at 63 projects/12,825 rooms and Doha, Qatar, with 54 projects/12,930 rooms, a record high room count for the city. Jeddah, Saudi Arabia, follows with 44 projects/9,155 rooms and then Makkah with 34 projects/32,931 rooms. At Q4 ‘21, 48% of the projects and 54% of the rooms in the region’s construction pipeline can be found within these five cities.

Five franchise companies account for 60% of projects and 58% of rooms in the pipeline in the Middle East at the end of the fourth quarter. Hilton leads this group with 97 projects/25,574 rooms. This is a record-high number of projects for the company in the region. Accor follows with 83 projects/21,529 rooms. Next is Marriott International with 74 projects/21,822 rooms, then InterContinental Hotels Group (IHG) with a record-high project count of 51 projects/11,953 rooms and Radisson Hotel Group with 24 projects/6,743 rooms.

The leading brands in the pipeline for these companies are Hilton’s DoubleTree with 26 projects/5,946 rooms and Hilton Hotel & Resort with 21 projects/7,096 rooms; Accor’s Moevenpick brand with 12 projects/2,911 rooms and its Novotel brand with 11 projects/3,177 rooms; Marriott International’s Courtyard by Marriott with 14 projects/3,269 rooms and its Residence Inn brand with nine projects/1,190 rooms. IHG’s top brands at Q4 are InterContinental with 12 projects/2,945 rooms and Holiday Inn with 11 projects/2,769 rooms and Radisson Hotel Group brands are led by Radisson Blu with 11 projects/2,344 rooms and Radisson Hotel with seven projects/1,796 rooms.

In the fourth quarter, the Middle East opened 23 new hotels accounting for 5,741 rooms, the highest hotel count in any quarter of 2021 for the region. For the year, the Middle East opened 58 new hotels/14,094 rooms. LE is forecasting 99 hotels/24,054 rooms to open in 2022 and another 107 hotels/25,854 rooms to open in 2023.