Europe's hotel construction pipeline hits record highs: LE

In the third quarter of 2019, Europe’s hotel construction pipeline climbed to record high counts with 1,710 hotels and 264,080 rooms, an 18 percent increase in hotels and a 16 percent increase in rooms year-over-year, according to analysts at Lodging Econometrics. 

This is the seventh year of pipeline expansion for the region, driven primarily by the substantial growth of the major global hotel companies that have acquired the brands of others or created new brands to bolster their existing portfolios throughout the past decade, the consulting firm claimed.

The Pipeline

Across the region, LE counted 830 hotels with 132,225 rooms under construction, 496 hotels with 76,692 rooms planning to start construction in the next 12 months and 384 hotels with 55,163 rooms hotels in the early planning stage. The three stages of development and the six chain scales of Europe’s pipeline are experiencing double-digit increases year over year and are at or near record highs.

However, Europe’s economy is likely now cresting as the region makes its way toward a Brexit resolution and through the economic turbulence and uncertainty of the U.S. and China trade war. According to World Bank data, Europe will be by far the largest victim of continued trade uncertainty, not China or the U.S. Weakness in pipeline growth is already beginning to show as new project announcements into the pipeline have declined substantially in the last two quarters.

Through the third quarter of 2019, Europe opened 325 new hotels with 43,089 rooms and is forecast to open another 81 new hotels and 9,241 rooms by year end. With the pipeline at record highs, the LE forecast for new hotel openings will continue to ascend in the coming years with 450 new hotels and 63,383 rooms scheduled to open in 2020 and climbing even higher in 2021 to 499 new hotels with an impressive 75,517 rooms expected to open.

Top Markets

Germany, Europe’s economic powerhouse, leads the construction pipeline with 314 hotels and 57,485 rooms. The United Kingdom follows at 296 hotels and 42,307 rooms, then France and Portugal with 172 hotels and 21,743 rooms and 115 hotels and 11,821 rooms, respectively. Next is Poland with 87 hotels and 13,485 rooms.

The cities in Europe with the largest pipelines are London with 82 hotels and 14,007 rooms; Dusseldorf, Germany, at an all-time high with 53 hotels and 10,471 rooms; and Paris at 52 hotels and 7,922 rooms. Next is Lisbon, Portugal, with 36 hotels having 3,247 rooms and then Moscow with 30 hotels and 6,396 rooms. Hamburg, Germany, follows closely with 30 hotels and 6,381 rooms.

Leading Companies, Leading Brands

The list of franchise companies with the largest construction pipelines is led by Marriott International with an all-time high of 220 hotels and 35,975 rooms. Next is Accor with 213 hotels and 28,941 rooms. Hilton follows with 176 hotels and 27,047 rooms, and IHG with 145 hotels and 24,330 rooms. These four global franchise companies account for 44 percent of all hotels in Europe’s pipeline.

The leading brands for these four companies are Accor’s Ibis brands with 105 hotels and 13,447 rooms and Novotel and Mercure Hotels with 24 hotels and 3,767 rooms and 24 hotels and 2,667 rooms, respectively. Marriott’s Moxy set a record high, with 70 hotels and 12,699 rooms, Courtyard by Marriott has 31 hotels and 5,522 rooms, and Residence Inn is at an all-time high, with 20 hotels and 1,909 rooms.

Hilton Worldwide has Hampton by Hilton with 71 hotels and  11,051 rooms, Hilton Garden Inn with 39 hotels and 5,851 rooms and DoubleTree by Hilton with 24 hotels and 3,072 rooms. IHG’s top brands are Holiday Inn Express with 67 hotels and 10,394 rooms, Holiday Inn with 34 hotels and 7,796 rooms and Hotel Indigo with 13 hotels and 1,478 rooms.