Credit Crawl Threatens Euro Hotel Supply

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LONDON-Paced by the United Kingdom, Europe is set for a record run of hotel room openings this coming year, but anyone fearing a stampede of inventory could find comfort in the tightening credit markets, according to a regional overview by Lodging Econometrics. LE president Patrick Ford terms conditions “ideal” for the fresh inventory, which will exceed 45,000 rooms in 2008 alone.

“The capital cities have been experiencing robust hotel occupancies,” Ford explains, “and many have enjoyed double-digit, year-over-year room rate increases in 2006 and again in 2007, strong indications of a shortage of guestrooms in many markets.” London has seen dramatic price accretion, and developers have responded rapidly. With a total pipeline of 277 projects and just over 40,000 rooms, the UK has 2.5 times as many units planned as the next closest European country, that being Spain. Nearly one-third of the UK rooms are being built in London, says LE, which attributes that to the city’s emergence as a global financial powerhouse and international hub of tourism. Other top areas experiencing substantial hotel room growth are Germany, Russia and Italy, with 15 major European cities pursuing between 10 and 20 actual projects.