Economic development in Brazil is booming, accelerated by a growing export economy and the country’s selection as host to the FIFA World Cup in 2014 and the Summer Olympics in 2016. With 259 hotels and 43,827 rooms coming online, Brazil has the largest pipeline in Latin America and the fourth largest pipeline in the world. It’s 45 percent of the total Latin America pipeline.
New openings in Brazil will rise to 46 hotels and 8,182 rooms in 2013, and in 2014 they will catapult to 87 hotels and 13,625 rooms. In that year, Brazil will have 54 percent of all forecasted new hotel openings in Latin America.
The Latin America construction pipeline stands at 590 hotels and 96,777 rooms, up year-over-year by 10 percent and 12 percent respectively. The pipeline is at its highest level in 13 quarters and next year will likely exceed its peak set in 2008.
Lodging Econometrics’ forecast for new hotel openings in Latin America in 2013 is 120 hotels and 18,183 rooms, which will exceed the previous cycle peak set in 2010. In 2014, this will escalate forward to 170 hotels and 25,089 rooms, while 2015 and 2016 are expected to rise to even higher levels as pipeline growth continues.
On a much smaller scale, Argentina is also seeing pipeline growth. At 49 hotels and 5,617 rooms, it is the world’s 16th largest pipeline. Of the remaining 13 countries in South America, half of their forecasted new openings will come from Argentina.
The total pipeline in Mexico peaked in the second quarter of 2008 and has been in decline since, but is still the world’s ninth largest pipeline by project count. The pipeline recently hit a four-year low at 89 hotels and 12,836 rooms. The number of hotels under construction is also at a four-year low. As a result, new hotel openings are expected to reach a cyclical bottom at 12 hotels and 1,719 rooms in 2013 before rebounding slightly in 2014.
In the Caribbean, new hotel openings will record a cyclical low in 2012 at a paltry six hotels and 618 rooms. Of the 39 hotels forecast to open from 2012 to 2014, 32 of them will be less than 200 rooms, reflecting the ongoing economic problems with larger destination resorts, a number of which are available for sale at prices significantly below replacement cost.
Central America, at 50 hotels and 9,574 rooms, has the smallest pipeline of any region in Latin America. Development is concentrated in the major capital cities, with 65 percent of all development in the luxury, upper upscale, and upscale segments. Considering the chain scales, the projects sizes are relatively small. Seventy percent of forecasted new openings will be under 200 rooms.
Panama drives the Central America pipeline with 31 projects and 5,732 rooms. Panama City, in particular, is benefiting from the economic stimulation coming from widening the Panama Canal. At 21 hotels and 4,309 rooms it represents 45 percent of all pipeline rooms in Central America.
Patrick “JP” Ford is senior vice president of Lodging Econometrics, Portsmouth N.H. For more information, please email info@lodgingeconometrics.com.
