At the end of 2008, the total construction pipeline for Latin America was 616 projects/107,433 rooms, according to research from Lodging Econometrics. Pipeline totals were down 10% by projects and 16% by rooms from the cyclical peak in Q1 2008. While the region’s Pipeline is trending down, to date the retreat is not as steep as it is in other world regions. Developers still consider it an attractive area for lodging development, particularly if they are partnered with a major hotel franchise company…
At the end of 2008, the total construction pipeline for Latin America was 616 projects/107,433 rooms, according to research from Lodging Econometrics. Pipeline totals were down 10% by projects and 16% by rooms from the cyclical peak in Q1 2008. While the region’s Pipeline is trending down, to date the retreat is not as steep as it is in other world regions. Developers still consider it an attractive area for lodging development, particularly if they are partnered with a major hotel franchise company.
The region’s pipeline is front-end loaded, with 55% of total projects already Under Construction. Having secured financing before the economic slowdown and global credit crisis impeded lending, these projects will most likely enter as new supply, with the rate of New Openings ramping up through 2010.
Brazil accounts for 31% of the total pipeline with 193 projects/32,819 rooms, followed by Mexico with 142 projects/24,569 rooms. Argentina, Dominican Republic and Colombia are also very active, but at a less heated level.
Developer sentiment remains subdued in the wake of the world’s economic and banking crises. At 38 projects/7,156 rooms, Construction Starts are off 61% by projects and 57% by rooms. With lending largely unavailable, many projects already in the Pipeline are now stalling in Scheduled Starts and Early Planning stages and cannot migrate forward. Cancellation and Postponement of projects already in the Pipeline,42 projects/7,383 rooms, are at a much slower rate than the previous two quarters, when there appeared to be a mass removal of projects at the onset of the economic crisis. New Project Announcements into the Pipeline, at 64 projects/9,176 rooms, are half of what they were one year ago, again due to the challenging economic environment. As in other world regions, trends for these metrics will likely continue until the world’s economic and banking situations gain footing again.
Forecast for new hotel openings
A total of 140 new hotels/23,361 rooms opened in 2008. With the Pipeline front-end loaded, the rate of New Openings is set to accelerate, with LE’s Forecast calling for 167 hotels/25,401 rooms in 2009 and 174 hotels/29,315 rooms in 2010. While these forecasts have been adjusted downward due to falling Pipeline counts, they still represent cyclical highs. LE’s Forecast for New Hotel Openings is based on current Pipeline totals and development trends as of the end of Q4 2008. The forecast does not account for any unforeseen changes in economic or lodging operation fundamentals that would alter these trends going forward.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
