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Analysis

Strong global growth driven by Africa and Asia [1/2]

With 3.6% growth from January 1, 2016 to January 1, 2017 in the global hotel and residence supply, for both branded and unbranded properties, the rate is the strongest in 15 years. This growth pushes it beyond several symbolic benchmarks: 25 million rooms and apartments worldwide; 8 million in Europe and closing in on 7 million in Asia Pacific. While old trends continue, a new region for growth seems obvious: the entire African continent, which is picking up where Latin America left off.

For more information, see the second part of this article.

The broader accomodations supply – including American “extended stay” options and European residence hotels – surpassed 25 million units as of January 1, 2017. The supply growth rate (+3.6% between 2016 and 2017) is roughly in line with that of the volume of international travelers:  +4% in 2016 with 1.2 billion international trips tallied by the WTO. The first lesson is that on a global level the growth of other commercial accommodations options, especially represented by sharing platforms, has not slowed the development of hotel capacities. And yet, the evolution of the supply needs to be examined continent by continent as the already mature countries in terms of equipment generally progress more slowly than the “new territories”.

North America content and Europe themselves with 1% net growth in supply. The balance of openings and closings remains positive, but it is more about renewed supply, and replacement of properties that cannot keep up with changing demands through products that are better adapted to the behavior of 21stcentury customers. This transformation is positive in itself as it aims to develop the supply towards “millennials”, the Y Generation that will gradually replace baby boomers as key players in hospitality consumption. It is symptomatic to see nearly all hotel groups developing new brands that are tailored to this generation.

Latin America and the Caribbean, which were still soaring last year thanks to major athletic events in Brazil, are returning to a more reasonable growth rate, with more than 4% additional supply. The economic difficulties experienced by this country do not encourage perpetuating this trend, even if it is more about a hiatus for developers while they wait for greater political stability. Neighboring countries – Peru, Colombia, Ecuador – despite a real leap in economic growth do not have comparable dimensions that would justify much growth in capacity.

The Asian growth engine is not losing speed. Its formidable growth (+9,2%) is due to the activism of Asian hotel groups which are once again set to conquer major cities with renewed hotel products affecting the midscale more than the economy range. This is a sign of the sociological and economic evolution of these vast territories.

And yet, the relative surprise in 2016 is the wave of new openings on the African continent, and incidentally in the Middle East. The new supply is up more than 5%. The geopolitical events that upset North Africa have led developers to look at the rest of the continent. After an initial phase mostly focused on South Africa, all the other Sub-Saharian countries are now under the watchful gaze of investors and operators. The risks inherent to instable situations in many countries encourage the search for local partners seeking support from international brands and adapted concepts. Growth is promising according to the curve of the GDP of certain major African nations. But one must expect development to be chaotic in some circumstances.

If you wish to access the complete file, find the entire 2016/2017 worldwilde hospitality report on our store.

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