Europe's hotel rooms portfolio to grow 7% by 2021: LE

During second quarter, Europe’s hotel-construction pipeline hit record high counts with 1,704 hotels and 260,111 rooms for what analysts at Lodging Econometrics called a "dramatic" 23 percent increase in hotels and 19 percent increase in rooms year over year.

There are currently 819 hotels and 128,284 rooms under construction. Hotels slated to start construction in the next 12 months stand at 496 hotels and 76,633 rooms, while those in the early planning stage are at 389 hotels and 55,194 rooms. Both of these segments are at all-time highs. 

All chain scales showed year-over-year increases and are at or near record-high project counts.

Lodging Econometrics credits low interest rates and accommodative lending terms for the soaring pipeline, noting rates are not likely to turn upward anytime soon as they are deemed important to bolster slowing economies and needed to off-set further trade and tariff uncertainties. Consequently, the pipeline is expected to continue to grow at a healthy pace for the foreseeable future, LE indicated.

Newest Projects

New project announcements into the pipeline for the last four quarters stand at a record high 855 hotels and 119,472 rooms. The last nine quarters have been "running high," analysts said, and the pace should continue at least into next year. 

In first half, 213 new hotels with 28,167 rooms opened across Europe. A further 192 new hotels with 24,689 rooms are expected to open by the end of the year. As a result of the thriving pipeline, LE forecasts new hotel openings will continue to climb in the years ahead with 432 new hotels and 60,694 rooms scheduled to open in 2020 and increase to 484 new hotels with 74,220 rooms expected to open in 2021. 

Should all the forecasted new hotels between 2019-2021 come to fruition, Europe’s census of open and operating hotel rooms, which currently stands at 2,885,630 rooms, will grow 7 percent.

Top Markets

Germany continues to lead Europe’s hotel construction pipeline with an all-time high 320 hotels and 57,689 rooms. The U.K. follows with 280 hotels and 40,970 rooms, then France and Portugal with 184 hotels and 22,140 rooms and 119 hotels and 11,733 rooms, respectively. Next is Poland with 85 hotels and 13,317 rooms.

The cities in Europe with the largest pipelines are London with 78 hotels and 13,632 rooms; Paris with 54 hotels and 7,946 rooms; and Düsseldorf with 52 hotels and 10,178 rooms. Lisbon follows with 39 hotels having 3,293 rooms, then Hamburg with 32 hotels and 6,581 rooms, both at record highs.

Top Companies

Franchise companies with the largest construction pipelines are Accor with a record high 261 hotels and 35,183 rooms. Next is Marriott International with 211 hotels and 34,432 rooms. Hilton follows with 174 hotels and 26,887 rooms, and IHG with 148 hotels and 24,152 rooms. These four global franchise companies account for 47 percent of the hotels in Europe’s pipeline.

The leading brands for these four companies are dominated by Accor’s Ibis brands with 134 hotels and 16,785 rooms. Other top brands for Accor are Mercure Hotel and Novotel, both at all-time highs, with 30 hotels and 3,202 rooms and 28 hotels and 4,881 rooms, respectively. Marriott International’s top brands are Moxy with 66 hotels and 11,855 rooms; Courtyard by Marriott with 33 hotels and 5,796 rooms; and Residence Inn, at an all-time high, with 17 hotels and 1,610 rooms. Hilton has Hampton by Hilton with 69 hotels and  10,703 rooms; Hilton Garden Inn with 42 hotels and 6,376 rooms; and DoubleTree by Hilton with 26 hotels having 3,455 rooms. IHG’s top brands include Holiday Inn Express with 69 hotels and 10,591 rooms; Holiday Inn with 36 hotels and 7,289 rooms; and Hotel Indigo with 14 hotels and 1,714 rooms.