LE: Latin America hotel construction pipeline continued to regress in Q2

The total Latin America construction pipeline stands at 586 projects/103,011 rooms, down 14% by projects and 13% rooms, year-over-year (YOY), according to Lodging Econometrics’ (LE) Q2 2021 Latin America Hotel Construction Pipeline Trend Report. This is the lowest number of projects in the Latin America construction pipeline since the first quarter of 2012.

In the first half of the year, 47 projects/11,657 rooms began construction in the region. New projects announced into the pipeline during the first two quarters of 2021 are down 61% YOY, with only 53 projects/9,537 rooms compared to the 87 projects/10,487 rooms announced in the first two quarters of 2020.

At the end of the second quarter, projects currently under construction stand at 314 projects/59,273 rooms, down 9% by projects and 4% by rooms YOY. Projects scheduled to start construction in the next 12 months have experienced the sharpest decline, down 20% by projects and 30% by rooms YOY, closing Q2 at 156 projects/25,536 rooms. Projects and rooms in the early planning stage also experienced a decline YOY, dropping 17% and 12% respectively, and settling at 116 projects/18,202 rooms.

Latin American countries with the most projects in the total construction pipeline are led by Mexico with 209 projects/37,597 rooms. Brazil follows with 109 projects/16,977 rooms, a cyclical low for the country. Following Brazil, Peru closed Q2 with 37 projects/4,788 rooms, the Dominican Republic with 21 projects/4,909 rooms and Colombia with 20 projects/3,174 rooms. Together, these five countries account for 68% of projects in the total pipeline.

Markets in Latin America with the largest pipelines include Lima, Peru, with 27 projects/3,862 rooms; Mexico City with 25 projects/3,616 rooms; Guadalajara, Mexico, with 19 projects/2,679 rooms; Cancun, Mexico, with 18 projects/9,510 rooms; and Sao Paulo with 15 projects/2,726 rooms.

The top hotel franchise companies in Latin America’s construction pipeline at the end of Q2 are Marriott International with 100 projects/16,032 rooms, followed by Hilton with 99 projects/15,763 rooms, an all-time high for the Hilton company in the region, then Accor with 94 projects/12,328 rooms, InterContinental Hotels Group (IHG) with 57 projects/6,518 rooms and Hyatt closed the second quarter at 18 projects/2,880 room. These five companies make up 63% of projects in the total construction pipeline and are forecast to see the highest number of new hotel openings in 2022 and 2023.

Leading brands in the pipeline are Accor’s Ibis brands with 66 projects/8,501 rooms, and Hilton’s Hilton Garden Inn with 26 projects/3,536 rooms and Hampton Inn by Hilton with 22 projects/2,653 rooms. These are followed by IHG’s Holiday Inn Express with 15 projects and 1,828 rooms and its Avid brand with 12 projects/1,282 rooms. Marriott’s Fairfield Inn closed the quarter standing at 12 projects/1,724 rooms.

In the first half of 2021, Latin America had 36 new hotels open, accounting for 6,489 rooms. The LE forecast for new hotel openings during the second half of the year calls for another 55 new hotels with 9,517 rooms to open, bringing the total to 91 projects/16,006 rooms by year-end. The forecast for 2022 shows a slight increase to 112 new hotels/19,701 rooms and another increase is expected in 2023, with 128 projects/20,809 rooms.