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European Hotel Pipeline Keeps Growing Despite Economic Troubles

Hotel pipeline in Europe keeps growing despite economic challenges and uncertainty about the future of the industry in general. According to the report by Lodging Econometrics, the total pipeline in Europe showed strong signs of growth in the fourth quarter of 2019. The construction pipeline reached 1,871 hotel projects with a total of 297,490 rooms. This is 19% more hotels and 22% more rooms than in the fourth quarter of 2018.

Currently, 879 hotels in Europe are already in the process of building. Once finished, they will add 140,620 rooms to the hotel supply of the region. The construction of another 532 hotels with 81,235 rooms is set to start over the next 12 months. Finally, the remaining 461 hotel (75,635 rooms) are in the early planning stage. All stages of the hotel pipeline are at their record highs and are twice higher than the lowest results of the decade.

However, the future of the hospitality industry in Europe is still unclear because of numerous factors. Modest economic growth and the recent Brexit make the economy of the European Union extremely vulnerable. Such factors as the coronavirus pandemic and the trade war between the US and China also have a significant impact on the region. It is now logical to assume that the results of the first quarter of 2020 will be below the estimate due to the factors mentioned above. Reduced exports, quarantine, and financial crisis are not the best time for investors to start thinking about opening new hotels across Europe.

That being said, Europe is still the most popular tourist destination in the world, and once the coronavirus pandemic is over, it is likely that people will be very excited to travel again after the period of isolation. As the hotels' performance in Europe remained positive in recent years, the major franchise companies continue searching for new niches and destinations where they can expand their networks.

What countries are they interested in? The United Kingdom leads the pipeline with 346 hotels (49,651 rooms), followed by Germany that has fewer hotels in the pipeline but more rooms in total (339 hotels with 61,836 rooms). France is the third most popular choice with 171 hotel projects (21,173 rooms). Portugal and Poland are the top four and five choices with 118 hotels (12,616 rooms) and 90 hotels (14,028 rooms) respectively. London hotels still attract investors the most – the city’s pipeline is currently 88 hotels (15,575 rooms). The number of hotels in Dusseldorf in the pipeline is all-time high (60 hotels, 11,443 rooms), followed by hotels in Paris, Hamburg, Lisbon, Moscow, Berlin, and Frankfurt.

25.03.2020

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