Building up – Asia Pacific only region of the world with increased hotel construction

19 January, 2022

The Asia Pacific region is the only area of the world showing increased hotel construction activity as at the end of last year, according to December 2021 data from benchmarking and hospitality data specialist STR. When comparing hotel construction pipelines in Dec-2020 and Dec-2021, total under contract rooms stood at just under 950,000, a +6.5% increase on the previous year.  

The year-on-year Asia Pacific data for Dec-2021 shows the number of rooms in construction (473,983 rooms) is up +5.0% and those in planning (297,687 rooms) are up +16.3%, while levels in final planning (170,210 rooms) are down slightly, -3.8%, on the same month the previous year. This brings the under contract total to 941,880 rooms. China (290,265 rooms) remains atop the region with the most rooms in construction, followed by Vietnam (30,546 rooms).

Construction levels slip across Europe, ME&A and Americas regions

The performance of other world’s regions is in contrast to Asia Pacific with reductions in total under contract room levels across Europe, the Middle East and Africa as well as the Americas, the latter influenced heavily by a fall from the early 2000 peak seen in the United States market.

In Europe, in construction levels (221,789 rooms) were down -7.6% year-on-year, those in final planning (163,805 rooms) down -4.9% and those in planning (159,232 rooms) up +4.7% to leave the total under contract count at 544,826 rooms, -3.5% fall on Dec-2020. Germany (45,121 rooms) and the United Kingdom (31,464 rooms) continue to lead Europe in total rooms in construction, according to the STR data.

Across the Middle East and Africa, in construction levels (130,225 rooms) were down -5.5% year-on-year, those in final planning (38,765 rooms) down -14.3% and those in planning (67,142 rooms) up +2.8% to leave the total under contract count at 236,132 rooms, -4.9% fall on Dec-2020. Saudi Arabia (40,269 rooms) and the United Arab Emirates (31,715 rooms) lead in construction activity, according to the STR data.

In the Americas, in construction levels (211,453 rooms) were down -16.8% year-on-year, those in final planning (220,044 rooms) down -20.6% and those in planning (329,474 rooms) up +39.0% to leave the total under contract count at 760,971 rooms, -1.0% fall on Dec-2020. The United States holds the majority of rooms in construction in the region with Mexico (14,020 rooms) and Canada (6,856 rooms) ranking second and third, respectively, in room construction.

US hotel construction ends year down 61,000 rooms from peak

The number of US hotel rooms in construction is down roughly 61,000 from the country’s all-time high achieved in early 2020, according to the STR pipeline data. In construction room levels (158,906 rooms) were down -19.2% on the previous year with those in final planning (185,231 rooms) down at a similar rate, -20.6%. Those in planning (284,502 rooms) were up by more than a third, +38.9%.

Rise in properties at planning stage provides strong recovery hope

The general trend across the world is that the number of rooms in the final two phases of the pipeline, construction and final planning remain influenced by the impact of the Coronavirus pandemic, but rising activity in the planning stage provides optimism on industry recovery.

These performance metric are not more evident than in the US where the past year has been the second in a row with far fewer rooms in construction and final planning. Alison Hoyt, STR's senior director of consulting, says the rise in planning activity could already be an indicator that the pandemic's impact on the pipeline will be different than had been seen during the Great Recession – a very positive observation.

"During the previous recession, construction declines persisted from 2008 through 2010, but with massive jump in planning today, the construction downturn may not last as long as more rooms advance to later phases of the pipeline," she says.

Sydney reached pandemic-era highs in Dec-2021

Reflecting the beginning of summer and impact of the holiday season, the hotel industry in Sydney, Australia, reported its highest room rates of the pandemic-era, according to preliminary Dec-2021 data from STR. The market’s absolute ADR level (AUD236.64) was its highest for any month since Dec-2019, while occupancy (45.0%) and RevPAR (AUD106.38) were the highest since May-2021 and Apr-2021, respectively.

On 31-Dec-2021, Sydney’s ADR (AUD533.81) was the highest in the market since 31-Dec-2019 (AUD651.85), while RevPAR (AUD287.57) was the highest since 01-Jan-2020 (AUD327.62). Additionally, daily occupancy for the month peaked at 65.3% on 11-Dec, according to the preliminary records. Looking ahead, STR’s Forward STAR data shows Sydney anticipated hitting its highest occupancy on the books on 15-Jan-2021 (32.0%). This demonstrates the “continued uncertainty and subsequent hesitation of guests to book too far in advance,” observes STR.

Dubai hotel rates reached six-year high in Dec-2021

Lifted by Expo 2020 and the holiday season, the hotel industry in Dubai, United Arab Emirates (UAE) reported its highest monthly room rates since 2015, according to preliminary Dec-2021 performance metrics from STR. The market’s absolute ADR (AED956.01) and RevPAR (AED747.28) levels were its highest for any month since Jan-2015 and Mar-2015, respectively, while occupancy was 78.2%. On 31 Dec-2021, the market’s ADR (AED1,963.67) was the highest for any one day in STR’s Dubai records, while the market’s RevPAR (AED1,743.89) was the highest since 31-Dec-2015 (AED1,768.85).