News for the Hospitality Executive
Econometrics Fall 2011 US Lodging Real Estate Trends Report
November 2011 - The lack of available financing and continued economic uncertainty remain major obstacles to Construction Pipeline growth, which is channeling in a bottoming formation for a 7th consecutive quarter. Project migration up the Pipeline toward construction is sluggish, resulting in extended timelines as developers wait for a more certain economic, lending and operating environment. Amidst a renewed emphasis by franchise companies to refresh their branded properties, many owners and investors who have accumulated funds from improving operations are now focusing on renovating existing hotels after a long period of postponement.
Projects Under Construction saw a slight increase over Q2 2011, but remain at cyclical lows, with 408 projects/51,599 rooms currently underway. Scheduled Starts in the Next 12 Months decreased again, falling below the 100,000 rooms level for the first time in memory to a low of 834 projects/94,755 rooms. Due to the current complex economic environment, Scheduled Starts are expected to trend further downward, as developers, seeking the ideal time frame to open, continuously reassess the feasibility of getting their projects underway. In several cases, they have moved projects out of the 12 months to start window back into Early Planning while they await more favorable conditions.
At 1,609 projects/201,576 rooms, 56% of Total Pipeline projects and 58% of rooms are now disproportionately stockpiled in Early Planning. The back end of the Pipeline has built up due to the backward migration of projects from Scheduled Starts, and also because many New Project Announcements (NPAs) are entering the Pipeline at this stage and not being fast-tracked. Until the overall economy recovers more substantially and financing becomes more readily available, many developers continue to plan new projects, but anticipate that it will be 12-24 months before those projects move forward in the Pipeline.
Because timelines for projects exiting the Pipeline continue to be extended, LE has again revised its Forecast for New Hotel Openings slightly downward for the next three years. LE now projects a total of 375 new hotels/39,636 guest rooms to open in 2011, then 339 hotels/38,287 rooms in 2012. In 2013, 370 hotels/38,248 rooms are anticipated to enter Current Supply. Additional downward adjustments to LE’s Forecast may be ahead if there is not a near-term resurgence in the general economy.
NOTABLE DEVELOPMENT INITIATIVES
Econometrics Report for Europe, Middle East and Africa Shows Economic
and Financing Concerns Impede Pipeline Project Migration; Saudi Arabia
Emerging as a Development Hotspot / September 2011
Econometrics Reports Latin America Pipeline Increases 14%, the 6th
Consecutive Quarter of Increases; Development Continues to Rebound in
South & Central America / August 2011
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|