Developers are rushing to build more hotels in Asia and development growth in China has reached unprecedented levels, according to an industry report.
According Lodging Econometrics – the Industry Authority for Hotel Real Estate, at the end of 3Q06 there were 656 projects in the Asian pipeline being actively pursued by developers.
In total, the projects have 169,691 guestrooms and average at 259 rooms each. In addition, 371 projects are already under construction.
LE’s president Patrick Ford said said many of the underdeveloped countries in the region are enjoying strong economic growth spurts.
“In the case of China and India, economic growth is so explosive it may well be overheating.
“Business and tourist travel are such big components of the region’s current growth cycle that it is no surprise that there are unusual and significant growth opportunities available for International Hotel Companies,” he added.
According LE, development growth in China is at unprecedented and China has the largest development pipeline in the region, and is second globally only to the United States.
According to LE, China accounts for 63% of the total rooms in the entire Asian pipeline with 316 projects and 107,725 guestrooms in the pipeline.
Ford said development is fast tracked everywhere as many major cities in China are presently “under roomed”. Accordingly, 65% of China’s pipeline projects and 70% of the guestrooms are presently under construction.
“International travel, both commercial and tourism is roaring. By the end of ’06 China will have grown to be the fourth largest tourist destination in the world. It expects to surpass the U.S. and become number one during the next decade.
“As the Chinese middle class is increasingly benefiting from the expanding economy, China’s native tourist travel is growing impressively as well,” he added.
Beijing’s pipeline has the fastest pace with 36 projects with 11,288 guestrooms in the pipeline. Seven hotels are scheduled to open in the fourth quarter and an additional 10 in 2007 and 12 in early 2008.
“Their development pace is geared to getting ready for the Olympic Games which will be held in Beijing in the summer of ’08,” Ford said.
According to LE, Asia’s gaming mecca city of Macau has the largest pipeline with 24 active projects incorporating 17,909 guestrooms. Projects average an 746 rooms in size and 21 of the 24 pipeline projects are already under construction. Macau presently does 90% of the Las Vegas annual gaming revenue and is charging ahead to surpass them during the next decade.
Ford said India is also booming and is “under roomed”.
Bangalore, Hyderabad, Chennai, Gurgaon, Pune and the suburbs of Mumbai are the area’s attracting international investment and as expected, are the cities with the largest development pipelines. Combined these cities account for 89 of the 161 projects in the pipeline and 16,734 guestrooms, which is 68% of the rooms in India’s total pipeline.
According to LE, India still suffers from an outdated infrastructure – airports, train systems, highways – and as a consequence is not yet an attractive destination for international tourists.
So far, LE has identified Marriott, Starwood, Hyatt, InterContinental, Hilton, Carlson, Choice and Wyndham – all with a portfolio of brands at different price points – as the market leaders in Asia.
Additionally, Shangri-La is particularly strong in China, while Taj Hotels has the largest pipeline in India.
“While many Asian markets are “under roomed” at the moment, current pipeline levels and LE’s forecast for new openings shows that this imbalance will be addressed.
“The next question for the hotel companies is, which of the smaller countries in the region are the most likely to emerge as new manufacturing or technology centers? Among the most frequently mentioned countries are like Indonesia, Vietnam and the Philippines,” Ford concluded.
By Adam Parsons
