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Analysis

Worldwide hotel chain supply: Global chain supply confirms growth

The relative stabilization of the two key markets of the international hotel chain industry, Europe and North America, has once again been compensated for by the dynamic development of hotel groups across Asia. Long neglected by international operators, Latin America and the Caribbean also gain in maturity thanks to record growth.

The global branded supply confirms its recovery, capitalizing on positive results since 2011 to produce the strongest growth over the last ten years. On the whole of the year 2015, the hotel supply gained close to 420,000 rooms, for 4.4% growth on a comparable basis. A new increase for the global hotel industry, further to that in 2014 (+4.1%) and 2013 (+3.2%), for a total of 9.9 million, rooms and apartments.



This dynamic is most evident in Asia which saw growth by more than 9.6% despite distinct, and ongoing difficulties for the Chinese and Japanese economies, representing a new rebound. This 10.7% growth, for an increase by more than 277,000 rooms in the hotel supply in the Asia Pacific region, is enough to produce two-thirds of the growth in chains worldwide. Next follow Europe and Latin America, with growth by 50,070 and 44,225 rooms respectively. While this addition represents a limited increase for the Old Continent (+2.4%) due to the already consequent penetration of chain hotels, it nonetheless represents more than the 2% average growth over the last ten years– proving the sector’s strong resilience despite an economic situation that remains complex in certain countries in the region.



Growth in Latin America’s hotel supply is memorable for 2015: the continent ranks just after Asia in terms of growth, with 9.9% growth in its hotel supply. The combined development of the middle classes and international travel in America and the Caribbean appears to inspire international hotel groups.



In keeping with the dynamic observed in recent years, the maturity of European and North American markets has led to hotel groups from these continents to export themselves internationally. It is particularly true for operators on the Old Continent, for which the export rate outside the regional market has reached 44.2%, new growth with respect to the proportion observed last year (42.9%). The North American brands follow suit with an idea to looking for new development opportunities on the other continents, and as of January 1, 2016 it had an export rate of 26.4%, versus 25.7% the previous year.



Next follow Middle Eastern and African chains, which reached a rate of 9.2% representing good, albeit less significant, performance with strong growth. Export rate of operators in the Asia Pacific region reached 5.8%: local groups appear to prefer partnerships with European groups – when they are not buying them outright – rather than trying to directly conquer new markets with their own brands. Asian operators already have much to do on regional markets, which alone account for the majority of growth in the global supply. A somewhat similar observation may be made about South American groups, which may be found at the bottom of the regional ranking with an export rate of just 1.3%.



Once again, the dynamism of destinations in Latin America and the Caribbean allow them to focus on their domestic markets. Growth in the global hotel supply was uneven from one category to the next. While properties on the economy segment reported phenomenal growth last year (+8%), the trend remains generally positive for 2015. Growth in the category, which represents close to one quarter of the global supply in volume, reached 5.9%, new growth that may be explained by the dynamism of economy chains on the Chinese market.



For the other hotel categories, growth was distributed more equitably than in 2014. The midscale hotel supply filled out (+3.8% versus +2.8% the previous year), as did upscale properties that are increasingly present. On this category, growth in the supply reached +4.8%, almost twice last year’s. Each of these two key segments for hotel chains constitutes a little less than one third of the global hotel capacity while the midscale saw more moderate growth.



At opposite ends of the hotel spectrum, the upper upscale and budget segments posted a slump in their growth. They represent a limited supply, with 6.6% of the luxury hotel supply and just 5% of the Budget segment. In the course of last year, growth in the hotel supply for these categories reached 1.1% and 3% respectively, which is not enough to catch up to the growth rate on other segments.



World Top 10: new growth of Chinese brands

The leading trio of hotel chains remains unchanged with respect to the previous year, the brands Holiday Inn, Best Western and Home Inns each post new growth in their global portfolio. The leading brands of IHG –Holiday Inn and Holiday Inn Express– stay in the lead with the opening of a hundred or so new properties worldwide in 2015. The American chain Best Western made similar progress with around 100 additional new properties, for an increase in capacity by close to 10,000 rooms. The inversion of the trend is flagrant for the brand, which had posted a loss (-150 hotels from our previous ranking) in equivalent volume across 2014.



Best western Pantheon Paris




While Best Western has the wind in its sails, it is now, more than ever, true for the Chinese brand Home Inns, which continues its dazzling rise in China’s hotel landscape. Unlike the two chains that are ahead of it in the ranking, Home Inns is present only on its domestic market. The brand is now part of the BTG group, which complement the supply with its own upscale brand, Jinguao Hotels & Resorts. China remains a market that is experiencing strong growth in standardized hotel products, despite the slump in the local economy. The economy brand makes a new breakthrough with 265 additional units, representing a capacity of 21,182 rooms. This new growth, which allows it to covet second place on the podium, leaves plenty of hotel brands envious. In fact, its compatriot 7 Days Inn comfortably takes assumes its position at the bottom of the podium. In ninth place in 2014, seventh in 2015, the other major economy brand in the Middle Empire leapt up by 600 operational hotels, to grow by 45,000 rooms.





Another Chinese player appears to be preparing to hold onto its position among the Top 10 hotel chains worldwide: the brand Hanting from the group Huazhu, with which AccorHotels signed an “extensive and long-term alliance” with an aim to develop 350 to 400 hotels operating under one of the French group’s brands over the next five years. The brand’s climb is as impressive as that of its compatriots. Having climbed from 15th to 10th place in our ranking last year, Hanting is now establishing itself in 8th position after the opening of more than 300 new properties.



In great part limited to the domestic market, growth in Chinese groups does not appear to be running out of steam and suggests new changes in the years to come within the hotel ranking. The Asia-Pacific region has not yet reached the maturity of the continents of Europe and America, and its growth potential remains unequalled for the hotel industry.









AccorHotels’ umbrella brand ibis holds on to fifth position in the ranking, which has not changed in three years. The brand gained 82 new properties worldwide, for capacity growth by more than 11,000 rooms, allowing the group to remain among the leading hotel brands. The American Hilton Worldwide also holds a significant position in the Top 10 worldwide with two of its brands in 6th and 7th position. Hampton by Hilton will surpass the star brand of the group, Hilton Hotels & Resorts, for the first time with a growth spurt by more than 11,000 rooms in a hundred additional units – this allows it to remain in the position it earned last year. This is not the case for the group’s eponymous brand that rises from 4th to 7th rung due to weaker growth in its supply. Its net portfolio gained only two additional units, putting it in tough competition with the takeoff of economy properties that dominate the ranking. The current dynamic is more positive for the eponymous Marriott brand that grew by no fewer than 30 units across 2015, meaning a new leap by more than 5,000 rooms. The brand Marriott Hotels Resorts & Suites thus maintains its 9th position, after dropping by one position last year.



Hanting Express Shanghai Huazhu

At the end of this Top 10 for hotel chains worldwide, we find the brands Comfort Inns and Comfort Suites. Within the framework of the brand’s revitalization strategy, the supply of brands within the group Choice Hotels International is currently traversing a period of improvement: they ranked 6th in 2014 and 8th last year. Together, the brands Comfort Inns and Comfort Suites reported many exits from the network with a loss of close to 90 units, representing a total capacity of 6,816 rooms. With growth suggesting a few more changes in the global hotel ranking, the chain Super 8 Motels from Wyndham Hotels Group crouches not far behind in 11th place, ready to pounce.

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