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  The Asian Lodging Development Pipeline Moving at a
Feverish Pitch; China and India "Under Roomed" 
Lodging Econometrics Completes Development Pipelines and Three
Year Supply Growth Forecasts for 21 Asian Countries
      
Portsmouth, NH – October 12, 2006 - Lodging Econometrics (LE), the Industry Authority for Hotel Real Estate, announced the completion of a Development Pipeline with a Three Year Forecast for New Hotel Openings for each of the 21 different countries in the Asia Pacific region.

LE’s president, Patrick Ford, said, “At the end of 3Q06 there were 656 projects in the Asian pipeline being actively pursued by developers.  Those Asia projects have 169,691 guestrooms and average 259 rooms each. 371 of the projects are already Under Construction.  The pipeline is moving forward at a feverish pitch as developers rush to complete their projects.”   

Many of the underdeveloped countries in the region are enjoying strong economic growth spurts. “In the case of China and India, economic growth is so explosive it may well be overheating.” explained Ford.  “Business and tourist travel are such big components of the region’s current growth cycle that it is no surprise that there are unusual and significant growth opportunities available for International Hotel Companies.”
 
Development Growth in China is Unprecedented

China has the largest development pipeline in the region, and is second globally only to the United States.  China has 316 projects and 107,725 guestrooms spread throughout the pipeline.  The room count is a staggering 63% of the total rooms in the entire Asian pipeline.
Development is fast tracked everywhere as many major cities in China are presently “under roomed”.  Accordingly, 65% of China’s pipeline projects and 70% of the guestrooms are presently Under Construction.  

International travel, both commercial and tourism is roaring.  By the end of ’06 China will have grown to be the fourth largest tourist destination in the world.  It expects to surpass the U.S. and become number one during the next decade.  As the Chinese middle class is increasingly benefiting from the expanding economy, China’s native tourist travel is growing impressively as well.

Beijing’s pipeline has the fastest pace.  Their pipeline consists of 36 projects with 11,288 guestrooms.  7 hotels are scheduled to open in the 4th quarter, an additional 10 in ’07 and 12 in early ’08.  “Their development pace is geared to getting ready for the Olympic Games which will be held in Beijing in the summer of ’08,” said Ford.

Shanghai’s pipeline, at 43 projects and 13,957 guestrooms, is larger. The New Openings will be spaced more evenly over the decade; 15 through ’07, 14 in ’08 and another 14 in ’09 and beyond.  Shanghai’s pipeline is timed for the World Expo that it will host in 2010.

Macau, Asia’s gaming mecca, will benefit from both the ’08 Olympic Games and the World Expo in 2010, as will many of China’s other primary and secondary cities.  Macau has 24 active projects in the pipeline with 17,909 guestrooms.  Projects average an amazing 746 rooms in size.  21 of the 24 pipeline projects are already Under Construction.  Macau presently does 90% of the Las Vegas annual gaming revenue and is charging ahead to surpass them during the next decade.

Another 6 cities – Tianjin, Guangzhou, Ningbo, Chengdu, Shenzhen and Sanya – combine for a total of 66 projects in the pipeline.  Two-thirds, or 44 projects, are Under Construction and are timed to capitalize on the rapidly growing commercial and tourism travel boom ahead.
 
India – The World’s Back Office

India too is booming and is also “under roomed”.  A number of cities have blossomed with suburban “Silicon Valley” type Special Economic Zones (SEZ’s) as many developed countries are outsourcing technology and software development, telephone service centers, and a variety of other accounting and medical services to India at a great savings. 

Bangalore, Hyderabad, Chennai, Gurgaon, Pune and the suburbs of Mumbai are the area’s attracting international investment and as expected, are the cities with the largest development pipelines.  Combined these cities account for 89 of the 161 projects in the pipeline and 16,734 guestrooms, which is 68% of the rooms in India’s total pipeline.

India suffers from an outdated infrastructure – airports, train systems, highways –  and as a consequence is not yet an attractive destination for international tourists.  However, as the middle class is becoming more prosperous Native Indian tourist travel is growing rapidly, particularly in coastal cities like Goa which has magnificent beaches, and in a number of other destinations with major religious shrines.

Of the 161 projects in India’s pipeline only 100 will have 4 and 5 star designations.  The other 61 are 1, 2 and 3 star developments.  A number of them are new economy brands recently designed for the Indian market place.  Taj’s Ginger Hotels is one brand, Lemon Tree and Red Fox are others.  Together they plan to compete with Accor’s Ibis brand which has 7 projects in India’s pipeline and a total of 31 throughout Asia.   It’s the largest number of development projects in the Asian region for any brand.

Leading Companies and Major Brands

With many heretofore under-developed countries blossoming, it’s a once in a lifetime opportunity for the International Lodging Companies to place their brands in these rapidly developing countries and be at the forefront of this landmark commercial and tourist expansion throughout Asia.  For international companies, there are no comparable opportunities like this anywhere else in the world.

Marriott, Starwood, Hyatt, InterContinental, Hilton, Carlson, Choice and Wyndham – all  with a  portfolio of brands at different price points – are the market leaders in Asia.  Additionally, Shangri-La is particularly strong in China, while Taj Hotels has the largest pipeline in India.  These are the companies whose brands can guarantee early success for developers.  They dominate the marketplace with their frequent traveler programs, website reservation systems, sales and marketing teams and regional operating groups.

While many Asian markets are “under roomed” at the moment, current pipeline levels and LE’s forecast for New Openings shows that this imbalance will be addressed.  The next question for the hotel companies is, which of the smaller countries in the region are the most likely to emerge as new manufacturing or technology centers?  Among the most frequently mentioned countries are like Indonesia, Vietnam and the Philippines

Lodging Econometrics (LE) of Portsmouth, NH is the industry authority for hotel real estate.  LE’s Development Pipeline databases contain individual project records for all Hotel, Condo Hotel and Timeshare development worldwide.

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Contact:

Paula Hamilton
Phone: (603) 431-8740 ext. 10
Email: phamilton@lodging-econometrics.com

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Also See: Hotels In India - Trends And Opportunity / Manav Thadani and Deepika Malkani - HVS / November 2004
The World's Biggest Hotel Chains Planning Major Expansion in Asia; China Hotel Industry is the Certain Winner / HOTEL Asia Pacific / December 2003


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