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Cash In On Global Development Opportunity

The world is full of development opportunity. Here are the hot spots you need to know about.

Tuesday, January 14, 2014
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Opportunity abounds. Globally.

Sure we write a lot about the state of the U.S. hotel market, but looking around the world there are many areas in which hoteliers are looking to build hotels because they smell a lot of profit potential.

That’s a sure sign global hotel development is going to be taking off during the next few years as money for projects becomes more widespread as a reaction to increased hotel demand in many countries around the world.

Of course the United States continues to see the most hotel development, but for those looking for other markets there are plenty to choose from.

“The international development market has seen signs of resurgence, particularly in the Americans throughout 2013,” explained Bruce Ford, Senior VP Business Development with Lodging Econometrics. “People are beginning to put projects into the pipeline at a fast rate compared to the past few years ago. Places such as Brazil, Mexico, Canada and the US have all seen pipeline growth during the last 12 months.”

The pipeline is considered projects that are in early stages of development through the end stages of construction.

According to Lodging Econometrics’ latest numbers that run through September 30 (end of year figures have yet to be released) the top 10 countries experiencing the most hotel development are the US with 2,819 projects, China with 1695 projects, Brazil with 401 projects, India with 335, Indonesia with 203, Canada with 171, the UK with 149, Russia with 123, Mexico with 106 and Germany with 99.

That means the global hotel market can expect to see many new hotel projects debut in 2014 and 2015. Most notably are a pair of hotels opening in time for the winter Olympics taking place in Sochi, Russia. There a Marriott will debut with 398 rooms and a Hyatt will debut with 230 rooms. Meanwhile Moscow will see a 1,000 rooms Holiday Inn open come June and a Sheraton will open in February with 342 rooms.

Asia is seeing a shift in new project announcements with Southeast Asian countries including Thailand, Indonesia, and Singapore seeing robust growth in announcements while India continues to drift downward in size of the construction pipeline. “People have seen the challenges lived out in real time regarding what it takes to develop hotels in the country,” said Ford.

The United States will open more hotel of course than any other country with an expected 607 openings in 2014 and 721 in 2015. Many of which will of course be in the select service category, the development darling of the last 10 years.

“Let’s call is a select service development boom throughout the Americas. The development of midscale, and upper midscale hotels continue to be developer’s choice in major cities across the Americas,” said Ford.

China will also see many new hotels open with 583 in 2014 and another 377 in 2015. In China development is starting to see a move to more select service projects as well with more midscale, upscale and economy hotels compared to larger luxury and upper upscale projects that were developed at the outset of the new construction boom, Ford explained.

Next up is Brazil which will see 81 openings this year and 88 next year. India should see 60 new hotels in 2014 and 77 in 2015 as Indonesia will see 51 this year and 48 the next. Other countries landing in the top 10 include Canada with 41 and 48 respectively in 2014 and 2015, UK with 35 and 30, Russia with 43 and 38, Mexico with 22 and 36 while Germany completes the top 10 with 30 in 2014 and 31 in 2015.

One notable region seeing a shift in development is the Middle East, with new hotel development shifting from the former center of hotel development Dubai to other areas such as Abu Dhabi, Riyadh in Saudi Arabia and Doha which is in Qatar.

“Dubai started as the first place to with major new construction projects and now many western brands and regional brands are seeking their second, third and fourth locations in these other areas,’ said Ford.

Meanwhile back here in the United States Ford said the top 25 markets are always the most attractive because they are able to command higher rates. But Ford said a few of the top 25 such as New York, Miami, Houston, and even Los Angeles -- albeit on a smaller scale – are seeing the largest share of projects in various stages of the new construction pipeline.

In 2012 the pipeline was as follows: USA with 2,771 projects, China with 1,562, India with 365, Brazil with 328, Indonesia with 177, the UK with 193, Canada with 166, Russia with 114, Mexico with 88 and Germany with 81.

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