Analysts at Lodging Econometrics (LE) report that in the third quarter of 2018 the hotel construction pipeline in the Middle East has set another cyclical high with the total pipeline standing at 617 projects/180,097 rooms. The new pipeline project counts are up 8 per cent while room counts show a 15 per cent increase year-over-year (YOY) when the pipeline stood at 572 projects/156,420 rooms.
Projects presently under construction are at 360 projects/115,222 rooms and are at a record high. Projects scheduled to start construction in the next 12 months are at 138 projects/35,299 rooms, and projects in the early planning stage are at 119 projects/29,576 rooms.
The pipeline has grown for five consecutive years off of the 2013 lows and has surpassed the development surge of 2007-08 led by Dubai and Abu Dhabi which awakened hotel development in the region. However, growth trends may be starting to slow as construction starts and new projects announced into the pipeline have been declining throughout 2018.
Countries with the greatest number of projects in the construction pipeline are the United Arab Emirates with 223 projects/63,734 rooms and Saudi Arabia, at a record high, with 214 projects/76,324 rooms. Qatar follows with 59 projects/14,245 rooms and Egypt with 43 projects/10,237 rooms. Continuing to dominate the construction pipeline in the U.A.E. and throughout the region is Dubai with 169 projects/50,420 rooms. Other notable but distantly following emirate countries are Abu Dhabi with 20 projects/5,058 rooms and Ash-Shariqah with 18 projects/2,671 rooms.
Cities with the largest hotel construction pipelines are Riyadh with 61 projects/11,574 rooms, the Provincial region with 58 projects/11,534 rooms, Jeddah with 58 projects/11,520 rooms, Doha, Qatar with 55 projects/12,618 rooms and Makkah with 37 projects/41,696 rooms. Four of the cities with the largest pipelines are in Saudi Arabia and are enjoying record highs in their pipeline project and room counts.
AccorHotels is the top company in the Middle East having the largest construction pipeline with 102 projects/28,079 rooms, a record high for the company. Marriott International follows with 95 projects/21,083 rooms, and Hilton Worldwide, also reached record highs in 2018, with 90 projects/25,888 rooms.
The leading pipeline brands for these companies are AccorHotels’ Ibis brands with 18 projects/5,861 rooms, and Novotel, with 16 projects/5,204 rooms, a record high; Marriott’s Courtyard with 21 projects/4,476 rooms, and Residence Inn with 16 projects/1,877 rooms, both of which are also recording their highest pipeline counts; Hilton’s full-service Hilton Hotel & Resort with 26 projects/9,280 rooms, and DoubleTree by Hilton with 25 projects/5,873 rooms.
The Middle East at 291 rooms per construction project, has the largest average project size in the pipeline of any region in the world as 67% of its pipeline is concentrated in the three highest chain scales: luxury, upper upscale, and upscale.
LE expects that new hotel openings in 2018 will be 86 hotels/23,464 rooms, surpassing for the first time the peak of 72 hotels/19,756 rooms set in 2009 following the 2007-08 development surge. New records will be set in both 2019 and 2020 as LE’s forecast for new hotel openings predicts that 114 hotels/27,518 rooms and 134 hotels/36,277 rooms will open in each year.
