LONDON-The hotel construction pipeline for the Europe, Middle East and Africa region has decreased for the eighth quarter in a row, according to Portsmouth, NH-based Lodging Econometrics. Though 1,307 projects are now planned or under construction, the number about to enter the region’s pipeline has slowed considerably, meaning a dearth of new hotels after 2013.

Pat Ford, president of the company, tells GlobeSt.com that there are a few different factors that have caused the slowdown of hotel development. The increased difficulty in financing is the number one factor, he says, in Europe because of the banking crisis and in the Middle East because the government sponsors have run out of cash to finance the huge projects in Dubai and Abu Dhabi.

“We’re now entering a period where it’s cheaper to just buy existing hotels than it is to build them,” Ford says. The one anomaly is London, which has increased new projects as it prepares to host the 2012 Olympics, he says.

The Middle East has 427 projects in the works for the next two years, and though the governments there suffered the recession like the rest of the world, Ford says it’s hard to stop these massive projects. “They’re so big they have to go forward, but the timeline is getting pushed outward. There are so many projects in the slow-motion model.”

Africa, he says, is much smaller in comparison to the other two regions, and there hasn’t been much development to speak of. About 70% of the 130 hotels planned for Africa will come online by 2013, and there is much more development planned.

Once the hotels are finished, the fact that there won’t be new product in the mix for a couple years is not a promise of improvement to the hospitality market, Ford says. “We lost in room demand because the consumer disappeared, not because there was too much supply. It’s a question of how soon the consumer will boost travel and meeting business. I think we’re going to see a modest, but choppy, recovery. There won’t be a double-dip recession, but it will be a slow process.”

Instant Insights /

EMEA Hotel Pipeline To Slow To Trickle by 2013

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