The global economic crisis has been blamed for a slide in planning and construction of hotel projects in Europe, the Middle East and Africa (EMEA) in the third quarter. According to a report released yesterday by Lodging Econometrics, a US-based research firm, projects in some stage of development the EMEA region fell 6 per cent from the previous quarter.
Another indicator of the slowing is the peaking of project cancellations in the region at 185 during the third quarter, compared with 87 in the previous quarter. The number of rooms that had been cancelled reached 36,049, up from 18,112 in the second quarter, said the report. "Project cancellations are high in all three regions, reflecting the unavailability of financing and new developer concerns about what appears to be the beginning of a global recession, causing slower industry growth and a fall-off in demand that is expected to continue trending downwards into 2009 and 2010."
At the end of the third quarter, the planning and development schedule for the EMEA region stood at 1,656 projects, containing 358,067 rooms. The number of rooms under construction was down 4 per cent compared with the previous quarter. The report said that 53 per cent of the total number of planned projects in the three regions were under construction. The Middle East suffered the least of the three regions, dropping just 3 per cent from the previous quarter in both the number of projects under way and room count. Europe suffered a 7 per cent loss in the number of projects and 4 per cent in total room count compared with the previous quarter.
"It's a sure sign that the lack of financing at reasonable rates and terms is having a braking effect on lodging development," said the report. The number of new project announcements have also been declining since the fourth quarter of last year as the lending crisis and plummeting commodity prices have triggered a worldwide slowdown. During the third quarter, the number of new project announcements in the three regions fell to 203 from 222 in the previous quarter. "Many developers have turned cautious and are taking a wait-and-see attitude until there is greater clarity about the economy," said the report.
In the Middle East, Dubai leads with 36 per cent of developments, at 155 projects and 57,390 rooms, followed by Abu Dhabi with 79 projects and 24,335 rooms. To overcome the hotel room shortage, the UAE needs to increase room numbers to fulfil its tourism targets. By 2012, the Abu Dhabi Tourism Authority plans to add 26,000 hotel rooms to the emirate, while Dubai aims to add 6,405 hotel rooms to reach a total of 51,323 rooms by 2010.