The hotel development pipeline in China has surpassed its pre-recession peak levels in terms of both projects and guestrooms, making it the first country market in the world to do so, according to Lodging Econometrics.
China’s 1,260 projects and 353,254 guestrooms under development is more than the 1,240 projects and 323,956 guestrooms in its pipeline during the second quarter of 2008, LE says.
China’s economy seemingly faltered only momentarily during the global recession as the government moved quickly with a massive expansion of credit to stimulate development growth and create jobs. Key beneficiaries were local governments, state-owned enterprises and important property developers. Big investment flows into infrastructure and the real estate industry caused the economy to roar forward, further stimulating lodging development.
The total pipeline for the Asia Pacific region grew in the first quarter to 2,036 projects and 505,562 guestrooms. As measured by guestroom inventory, the first quarter pipeline is virtually even with the peak reached in the second quarter of 2008 and is heavily driven by development activity in China, which accounts for 70% of the region’s ongoing development.
India, with 412 projects and 75,112 guestrooms, has the region’s second largest pipeline and the third largest in the world. Developers continue to experience delays caused by governmental permitting and approval issues, as well as logistical and infrastructure difficulties, all of which have restrained pipeline growth. Year-over-year pipeline counts are down 6% by projects and 1% by guestrooms, and are down 12% by projects and 2% by guestrooms from the second quarter 2008 peak. New openings in through next year will be at cyclical highs, as properties currently under construction have risen to 56% of the total pipeline from a low of 38% during the 2008 peak.
Vietnam has the region’s third largest pipeline and the world’s eighth largest by guestroom count, with 62 projects and 18,013 guestrooms. Vietnam’s total pipeline is up 29% year over year, with significant development occurring in a number of emerging resort locations along the South China Sea. The Da Nang area alone has 16 projects and 4,255 guestrooms in the pipeline.
