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Analysis

Worldwide hotel supply 2016: Latin America and Asia drive growth in the global supply

While hospitality news remains highly influenced by the activism of Chinese groups, developers are also starting to look towards Latin America and the Caribbean. The hotel supply remained relatively stable in the United States and Europe. Asia also follows at a good pace, while Africa-Middle East marks a pause

The global hotel supply, including accommodations in tourism residences and extended stay brands passed the benchmark of 22 million rooms, for growth by some 4% with respect to last year’s listed supply. The rate is relatively sustained thanks to hotel groups, whose global supply progressed by more than 800,000 rooms net, out of a total of 965,000 new rooms added from one year to the next. The unbranded hotel supply progresses nonetheless, although it is under even more pressure than branded hotels to respond to demand for comfort, equipment and good quality for price. The unbranded supply grew by 164,000 rooms net.

This strong growth in hotel chains globally boosts the penetration rate of brands from 42% to 44% on the whole of the global supply. While the supply is experiencing strong growth, some regions worldwide are catching up in terms of hotel equipment or taking advantage of major events to relaunch tourism investments.



The analysis of the breakdown by continent shows a near stagnation in Europe, around 7.9 million rooms; the same is true for North America which just crosses the 5.4 million milestones with growth by some 70,000 rooms outside the Mexican supply in Latin America. The Africa-Middle East region progressed moderately by less than 50,000 rooms. This means that global growth relies heavily on Asia Pacific, with some 300,000 additional rooms net, whereas this year Latin America and the Caribbean also sparked interest of hotel investors.



Evolution of the global supply by continent over the last 15 years




The FiFA World Cup and the forthcoming Olympics in Rio have stimulated investment in Brazil, which has been hit by an unprecedented economic crisis and political instability that compromise its appeal. From one year to the next, the country gained some 17,000 additional rooms to commercialize.



A regional entity including Mexico, Chile, Argentina, Brazil, Colombia and Peru accounts for 85% of the GDP on the sub-continent. Despite all the political and economic vicissitudes, they contribute to this growth dynamic with a constant increase in life quality. Of course it will be necessary to manage post-2016, once results are in from the Olympics in Brazil and the renewal of the political class to bring greater stability to an area whose growth rates constantly go up and down.

Thus, the ranking of accommodations capacities is subject to several significant changes in 2015 and 2016. Keeping ahead at a pace generated by history, the leading eight hotel markets in the ranking do not change position, but the differences are gradually shrinking. While the United States remains under the 5 million rooms mark, China has been steadily nibbling away at the gap separating them and is about to cross the 2 million rooms mark. Just ten years ago it was not among the Top 10. The major European nations–Italy, Germany, Spain, United Kingdom and France– relying simultaneously on their tourist attractions and business tourism activities, conventions and trade fairs, maintain their positions with minimal change in hotel supply.



Each country is at a different stage in restructuring the historic hotel supply with new concepts for new generations of clientele. The draining has come to an end and we are once again in a global growth phase for the supply in which unbranded properties, such as boutique hotels, also progress. Online distribution, despite sometimes exorbitant costs, dealt a new hand and led to a re-examination of the brand when the location is good. While staying in 8th place in the global ranking, Japan grew its supply by some 65,000 rooms. This is good news after difficult years for a country that experienced an economic downturn and the consequences of Fukushima. Thailand experienced stability as a destination that is very popular with regional clientele, but less so among Western tourists due to its political instability.

Like the United States, Canada is holding on to its position in the Top 15, but lost two rungs to two nations that are more dynamic in the growth of their hotel supply: Mexico and Brazil. Even with growth by just under 15,000 rooms, Greece also dropped one rung in the global ranking to find itself practically neck and neck with its Mediterranean rival: Turkey, a favorite destination for hotel developers, which has grown by nearly 60,000 rooms and apartments in one year. The neighboring political crisis and conflict in Syria has not discouraged investors, who are mostly locals. In many ways, Istanbul remains an experimental city where new concepts are being developed, and where major hotel groups wish to strengthen their presence to be ready for the country to take off economically. There is a newcomer to the Top 15: Saudi Arabia, which already has more than 306,000 rooms and apartments available. The country, which is not yet suffering too much from the drop in the price of oil, wants to manage the steady and increasing flow of religious tourists to Mecca.

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