News for the Hospitality Executive
August 17, 2011 - Latin America’s Total Construction Pipeline rose for a sixth quarter in a row to 528 projects/85,417 rooms in Q2 2011. Total projects are now up 14% and rooms up 6% year-over-year (YoY), propelled by continued rapid Pipeline growth in South and Central America, with projects up 28% and 21%, respectively, in the past year.
At 225 projects/35,803 rooms, Latin America’s Under Construction project counts are up 13% YoY, but down 6% by rooms, as the average size of new projects entering the Pipeline has declined by 11 rooms due to the higher proportion of smaller-sized Upscale and Midscale projects. Scheduled Starts in the Next 12 Months, at 139 projects/24,853 rooms in Q2, are up 3% by projects and 8% by rooms from Q2 2010. At 164 projects/24,761 rooms, Early Planning projects are up 28% and rooms by 30% YoY. Project counts have surpassed the previous Q1 2008 peak by 31%. Early Planning totals are expected to continue to build, as many New Project Announcements (NPAs) into the Pipeline are entering in this stage.
Developer enthusiasm is strong in South America, where economic trends are outpacing much of the rest of the world. With 298 projects/45,658 rooms, the region’s Total Pipeline is at its highest since Q1 2009. Annualized New Project Announcements into the Pipeline are at their highest since 2008. Brazil’s Total Pipeline, with 184 projects/29,790 rooms, represents 62% of South America’s total projects. Over the last 18 months, the nation’s Central Bank has increased interest rates seven times in an effort to slow rapidly rising inflation and cool its overheated economy. These rate increases are impacting migration up the Pipeline toward construction, resulting in a build-up of projects in Scheduled Starts and even more so in the Early Planning stage, which are at their highest level since 2007.
Central America’s Total Pipeline is at a new high of 53 projects/10,674 rooms. Panama and Costa Rica have 58% and 26% of total projects, respectively. With 110 projects/16,226 rooms, Mexico’s Pipeline continues to trend downward, as social unrest, particularly in the border towns, have hampered tourism and impacted development. In an effort to encourage investment and development, the Central Bank has reduced interest rates to new cyclical lows.
BRAZIL’S WORLD CUP CITIES - TOTAL PIPELINE
NOTABLE DEVELOPMENTS & NEW OPENINGS
Econometrics Reports its Forecast for New Hotel Openings for 2013 at
409 Hotels/39,162 Rooms - Expects Net Supply Growth of Just 0.6%-0.8%
for Each of the Next Three Years / August 2011
Transaction Prices Continue To Accelerate As Cap Rates Are At
Pre-Recession Lows During Q1 2011; Average Selling Price at Record High
of $125,946 Per Room, a 30% YoY Increase from Q1 2010’s $97,084 per room
/ June 2011
Declining Pipeline Points to a Future Cycle of Profitability for U.S.
Hotel Operators According to New Lodging Econometrics Report / May
Econometrics Reports U.S. Hotel Openings to Remain at Cyclical Low in
2011 and 2012 / February 2011
Econometrics Q3 2010 Americas Real Estate Trends Report; Brazil's
Pipeline Up 87% Year-Over-Year / December 2010
Econometrics Revises its 3rd Quarter Forecast for New Hotel Openings
Downward to 562 Hotels for 2011 & 515 Hotels for 2012 /
Starts for U.S. Hotels Reach a Record Low of 80 Projects with 8,566
Rooms in the 2nd Qtr 2010 / LE Forecast / July 2010
|U.S. Hotel Construction Pipeline Decelerating Rapidly; LE First Quarter 2009 Results / April 2009|