Global development report shows hotel construction plowing ahead

With rates on the rise across the globe, is the era of acquisitions being replaced with renewed construction? A new report from STR Global on worldwide hotel development pipelines shows the UK leading development in Europe with 130,652 rooms under contract, though numbers for the region are technically down.

According to the June 2015 STR Global Construction Pipeline Report, this represents a 10.2-percent decrease in rooms under contract compared to June 2014, and a 7.6-percent year-over-year decrease in rooms under construction. The UK currently has 10,425 rooms under construction in 72 hotels. Meanwhile three other countries in Europe reported more than 5,000 rooms under construction: Turkey (8,906 rooms in 51 hotels); Russia (8,554 rooms in 45 hotels); and Germany (6,827 rooms in 41 hotels).

The report also found there are 2,363 hotels totaling 554,532 rooms under contract in the Asia Pacific region, representing a 6.7-percent increase in rooms under contract from the same period last year. The region is up 0.6 percent in year-over-year room contraction, with the majority of this taking place in China who is developing 145,167 rooms in 452 hotels. Three other countries reported room construction in excess of 10,000: Indonesia (27,243 rooms in 148 hotels); India (26,159 rooms in 158 hotels); and Malaysia (10,806 rooms in 39 hotels).

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Another large increase in rooms construction is taking place in Central and South America, which is up 4.8 percent. This is represented by a pipeline of 438 hotels under construction, totaling 68,618 rooms. Construction is led by Brazil, which has 18,572 rooms in 107 hotels on the way. Four other countries reported more than 1,000 rooms Colombia (3,085 rooms in 21 hotels); Argentina (1,447 rooms in 11 hotels); Chile (1,343 rooms in 10 hotels); and Panama (1,113 rooms in seven hotels). 

But by far largest increase in rooms comes from the Middle East and Africa. STR's report found a 17 percent increase in rooms in the region, consisting of 659 hotels, or 168,361 rooms under contract. Dubai leads the market with 17,358 rooms under construction in 68 hotels, though Makkah in Saudi Arabia is close behind with 14,882 rooms in nine hotels. Other major markets include Riyadh, which reported 6,551 rooms under construction in 26 hotels, and Doha in Qatar, which is building 6,119 rooms in 25 hotels.