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Europe, Middle East & Africa Construction Pipeline – Q1 2009
At the end of Q1 2009, Europe's Construction Pipeline stands at 912 projects/153,189 rooms, down 11% from Q2 2008's cyclical peak. Of the total Pipeline, 457 projects/78,155 rooms are Under Construction, the lowest level seen since Q3 2007. Project and room counts in the Start Construction in the Next 12 Months and Early Planning stages remain high, as project migration toward Under Construction is significantly slowed by the lack of attractive financing.
At 477 projects/142,702 rooms, the Middle East Total Pipeline has fallen 14% and 13%, respectively, from the Q2 2008 peak. Over 53% of the region's total Pipeline projects are currently Under Construction. New Hotel Openings are expected to accelerate in 2009, 2010 and into 2011, as these large, iconic projects come online. The Pipeline in Dubai is at 124 projects/48,558 rooms, representing 34% of all guest room development in the region. Dubai's average project size is 392 rooms, one of the highest for any country or market worldwide, second only to Las Vegas.
The Total Pipeline in Africa is 174 projects/35,253 rooms, a 3% decline by projects and 4% by rooms from the peak. With 47 projects/9,175 rooms, Morocco makes up 27% of the continent's Total Pipeline projects, followed by South Africa, 25 projects/4,250 rooms, and Nigeria, with 16 projects/3,939 rooms.
Construction Starts in all three regions are continuing their downward trend that began a year ago, as the lack of available capital keeps a brake on project migration up the Pipeline towards Under Construction, causing a backlog of "stalled" projects. In Europe, Construction Starts are at a low of 68 projects/10,839 rooms and are expected to trend lower. At 19 projects/5,056 rooms, Constructions Starts in the Middle East are down 50% from their peak, as lending and operating concerns are now belatedly impacting real estate development here, as they did much earlier in other parts of the world.
Project Cancellations/Postponements remain at high levels. The availability of financing is so restrictive and lodging operation declines are impacting so significantly that, of the 116 Cancellations/Postponements reported, 51 or 44% were already Under Construction and abruptly halted. 78 projects/12,120 rooms were cancelled or postponed in Europe. 22 projects were in the United Kingdom and 14 in Spain. Out of Europe's total 78 Cancellations, 36 projects were already Under Construction. Middle East Cancellations/Postponements moderated in Q1 to 32 projects/8,178 rooms. Dubai saw 9 projects cancelled, 6 of which were Under Construction.
In Q1, all three regions reached trend line lows for New Project Announcements (NPAs) into the Pipeline, as the lending and operating environment continued to impact developer sentiment. 79 new projects/12,514 rooms were announced in Europe, 36 of which are in the United Kingdom. In the Middle East, 22 new projects/6,801 rooms were announced, with five each in Egypt, Saudi Arabia and Abu Dhabi. 18 projects/2,642 rooms were announced in Africa, four in Morocco.
Forecast for New Hotel Openings
In Q1 2009, a total of 68 new hotels with 11,924 guest rooms opened in the EMEA region. Approximately 60% of these new guest rooms were in Europe, with a further 28% in the Middle East. Total New Openings in Europe for 2009, at 277 hotels/38,879 rooms, will be down 10% from 2008. Guest rooms are expected to bounce back and set a new high in 2010, with 278 new hotels/47,464 rooms scheduled to open. New Openings in the Middle East and Africa are poised to accelerate each year into 2011. The Middle East will see 99 new hotels/25,829 rooms open in 2009, then 110 hotels/31,725 rooms in 2010, with a majority of these new openings in Dubai and Abu Dhabi. Africa will have 42 new hotels/8,864 rooms come online in 2009, with a further 54 hotels/10,072 rooms in 2010.
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