(Mark Your Calendars: RealShare Hotels 2011, September 15 in New York City)
LONDON-There will be an increase in hotel development completions in Europe in the next two years, but the pipeline for new projects will be cleared out after that because of a lack of financing, according to Portsmouth, NH-based Lodging Econometrics. In its Spring 2011 Europe, Middle East and Africa report, the company also details that many of the projects in the Middle East are also suffering from lending dry-up.
Patrick Ford, president of the firm that measures the hospitality industry, tells GlobeSt.com that the Europe hotel pipeline will almost empty out by 2012. “There won’t be many replacements in the pipeline for the next seven quarters,” he says. “There will be projects in the planning stages, but they won’t be cued up to go because financing is still not readily available.”
More than one quarter of the hotel projects in Europe are being built in the United Kingdom, about 208 properties out of the total 790 projects in the pipeline. The United Kingdom is the fourth largest hotel pipeline in the world, following the United States, China and India. Russia is the 10th largest.
Some of the properties going into the United Kingdom include three Hilton Worldwide projects, including a 206-room property in Leeds, a 157-room project in Bournemouth and a 146-room property in East Sussex. Other chains are active in Europe, including a Marriott International venture with Spanish hotel group AC Hotels to rebrand 86 hotels in Spain, Portugal and Italy as AC Hotels by Marriott.
The one place there’s been massive hotel activity has been in mergers and acquisitions, such as Hong Kong-based New World Hospitality, a division of New World Group, buying up Dallas-based Rosewood Hotels & Resorts for $230 million. Ford says it’s expected that institutions, flush with cash, would start buying up portfolios and companies. “Wall Street was on the sidelines during the recession, now institutional buyers are moving quickly in 2010 and 2011 on clusters of properties or other companies,” he says.
The hotel industry had been booming in the Middle East until global lending dried up. Projects in Abu Dhabi are still on track, but Dubai has had slowdowns in construction and delivery. “A lot of projects in Dubai are taking much longer to complete than they normally would, developers can’t get the back-end financing together. As a result, there are many projects functioning with near-skeleton crews,” Ford says.
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