HENDERSONVILLE, Tennessee—The majority of global regions increased their rate of room growth in 2019 as construction times also increased.
According to STR, the parent company of Hotel News Now, at the end of 2019 there were approximately 17,260 hotels representing roughly 2.4 million rooms in the active pipeline globally. Overall, rooms in the global active pipeline increased by 11.6% compared to the year-end figure from 2018. Notably, growth in the Middle East pipeline declined in 2019 due to rapid growth in prior years (Figure 1).
STR tracks global pipeline projects in terms of chain scale, brand, development phase and region. For the U.S., the data shows that, on average, it took approximately 3.3 years to build a hotel from planning to opening in 2019, compared to the long-run average of 2.8 years from 2010 to 2019. In some chain scales, hotel projects in the U.S. pipeline have followed a similarly slow trend (Figure 2).
Although such a trend is not desirable, U.S. hotel construction is indeed faster than the global average. In fact, 10-year data indicates that the construction of full-service U.S. hotels is typically four months faster than the global average (Figure 3). That information is pivotal, for among the many factors that global hotel developers have to consider, project time is often a priority. For instance, one of the most common reasons that hoteliers consider modular construction in development projects is to reduce the time-to-market.
Conclusion
The increasing trend in construction time is cause for concern. It is often associated with risks and uncertainty, especially when hotel developers manage large-scale portfolios. STR will continue tracking the global hotel pipeline and time spent in development both in 2020 and beyond.
Jan Freitag is the SVP of lodging insights at STR. Tingting Duan is a research analyst at STR.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.