Europe Constricting Hotel Pipeline

Europe's hotel construction pipeline is at a two-year low, and a significant number of projects—including many already under construction—were canceled in the first quarter of 2009, according to a report released this week by research firm Lodging Econometrics.

At the end of the first quarter, Europe's hotel construction pipeline had 912 projects totaling 153,189 rooms under construction or in the planning stages, down 11 percent from the peak level seen in the second quarter of 2008, according to the report. Of those, 457 projects, or 78,155 rooms, were under construction, the lowest level since the third quarter of 2007.

Financing difficulties are keeping a number of projects in the planning stages, the report indicated. Europe saw only 68 construction starts in the quarter, and that is expected to drop further throughout the year.

Additionally, developers in Europe canceled or postponed 78 projects totaling 12,120 rooms during the quarter, according to Lodging Econometrics. A little under half of those projects already were under construction. The United Kingdom and Spain had the highest numbers of canceled or postponed projects: 22 and 14, respectively.

For the full year, Lodging Econometrics forecasts that developers in Europe will open 277 hotels, or 38,879 rooms, down 10 percent from the number opened in 2008. The number of projects opening in 2010 is forecast to be 278, but those projects will account for a new high of 47,464 rooms, according to the report.