European pipeline sluggish as Middle East picks up

At the end of Q2, Europe’s construction pipeline stood at 807 projects/132,187 rooms, a slight year-over-year (YOY) increase of 8 percent by projects and 1 percent by rooms. Since the cyclical bottom established in 2010, overall pipeline growth has been sluggish.

Pipeline increases are concentrated in the scheduled to start in the next 12 months and early-planning stages, where new project announcements (NPAs) traditionally enter the pipeline. NPAs had previously been in decline, but have rebounded modestly in the last two quarters as hotel operating statistics continued to strengthen.

Eurozone economic statistics in the second quarter were alarmingly weak, setting off concern throughout the continent. The economies of Germany and France faltered, and Italy even slumped back into recession. Recent economic improvements in the troubled economies of Greece, Spain and Portugal also cooled.

The United Kingdom accounts for 25 percent of the European pipeline with 202 Projects. Other noteworthy pipelines are: Russia with 109 projects, Germany with 98 and Turkey with 67. These four countries represent 59 percent of Europe’s current pipeline.


The Middle East has 327 projects/87,611 rooms in the construction pipeline with YOY gains of 18 percent by projects and 8 percent by rooms. Projects under construction showed a small YOY gain, 7 percent by projects and 6 percent by rooms, while projects scheduled to start in the next 12 months have increased 40 percent by projects but just 13 percent by rooms. Projects in early planning are up 35 percent by projects and only 10 percent by rooms. 

Now that the region has moved past the worst of its financial crisis, many global hotel companies see another development boom taking root.

Several other factors are influencing development in the Middle East. Dubai will host the World Expo in 2020, while the World Cup is scheduled for Qatar in 2022. The region is also becoming a major airline hub, with such fast-growing airlines as Saudi Arabian Airlines, Emirates Airline in Dubai, Etihad Airways in Abu Dhabi and Qatar Airways, all competing to become the airline of choice for travel connections to and from major global markets in the East, the West and in Northern Europe. The region is also once again a growing tourist destination with the likes of Saadiyat Island, which is currently being built into a massive cultural district that will include branches of the Louvre and Guggenheim Museums. 

Saudi Arabia has the largest pipeline in the Middle East with 105 projects followed by the United Arab Emirates with 95 projects, 54 of which are in Dubai and 21 in Abu Dhabi. Qatar has 33 projects and Oman 23. These four developed countries account account for 256, or 78 percent, of the 327 pipeline projects in the Middle East.

Africa posted YOY gains in its pipeline with 192 projects/34,438 rooms, an increase of 19 percent by projects and 20 percent by rooms. Here, too, most pipeline growth is occurring with NPAs entering into the pipeline in the scheduled to start and early planning stages. Projects under construction have increased only slightly YOY, 4 percent by projects and 8 percent by rooms.

The countries with the most projects in the pipeline include Morocco with 42 projects and Nigeria with 26. The leading market is Marrakech with 13 projects. Lagos and Nairobi both follow with 12 projects each.


For the first time, Lodging Econometrics released its 2016 forecast for new supply along with its revised estimates for 2014-15.

In Europe, the 2014 forecast will see 235 new hotels/39,178 rooms open. Many of these projects were previously stalled in the pipeline and re-started in 2012. Reflecting current pipeline trends, new supply will then dip to approximately 34,000 rooms in both 2015-16.

LE expects an acceleration of new openings in the Middle East, beginning in 2016, as projects that are already in the pipeline begin to exit as new supply. New openings will accelerate even further as a stronger flow of NPAs are expected to enter the pipeline throughout the decade.