LE: Mexico Leads Latin America’s Construction Pipeline

PORTSMOUTH, NH—According to the recent Lodging Econometrics (LE) Latin America construction pipeline report, analysts at LE state that the total construction pipeline stands at 711 projects/128,453 rooms, a 2% decline in projects and 3% increase in rooms, year-over-year (YOY).

There are 329 projects/58,315 rooms presently under construction, and projects scheduled to start construction in the next 12 months are at an all-time high with 214 projects/43,050 rooms. Projects in the early planning stage stand at 168 projects/27,088 rooms.

New projects announced into the pipeline during 2019 were up 2% by projects, but 22% by rooms YOY with 261 projects/49,178 rooms compared to the 255 projects/40,282 rooms announced in 2018. This is the second time since 2011 that new project announcements have dropped below 300 projects. This suggests that Latin America’s pipeline is in a cyclical decline.

Throughout 2019, Latin America opened 118 new hotels/22,502 rooms, the lowest counts since 2013, which had 103 new hotels/15,932 rooms open. The forecast for 2020 will likely see an increase to 137 new hotel openings with 24,208 rooms, and 2021 is forecast to rise slightly to 144 new hotels/24,713 rooms opening.

Pipeline declines continue throughout most of the markets in Latin America, most drastically seen in Brazil, which historically has had the largest construction pipeline in the region. Currently, Mexico leads Latin America’s construction pipeline with an all-time high 228 projects/41,609 rooms, followed by Brazil with 140 projects/23,309 rooms. However, there is optimism that Brazil, the region’s largest economy, has the potential for growth in 2020 if the country continues to see a rise in domestic consumption, a resurgence in the construction and service sectors, steady implementation of reform policies, sustained and controlled inflation and continued low interest rates.

Following behind Brazil is Peru, standing at 44 projects/6,100 rooms and then Colombia and the Dominican Republic with 40 projects/6,372 rooms and 32 projects/8,361 rooms, respectively. Collectively, these five countries are responsible for 68% of all the projects in the total Latin America pipeline.

Top hotel companies in Latin America’s construction pipeline are Marriott International, at a new pipeline high, with 135 projects/23,562 rooms. Accor follows with 101 projects/13,480 rooms, then Hilton with 86 projects/12,212 rooms and InterContinental Hotels Group (IHG) with 56 projects/6,804 rooms. These four companies account for 53% of the projects in the total construction pipeline and are forecast to see the highest number of new hotel openings in 2020 and 2021.

The top brands are Accor’s Ibis brands with 70 projects/9,345 rooms, Hilton Garden Inn with 24 projects/3,316 rooms, Hampton by Hilton with 23 projects/2,716 rooms, Marriott’s Fairfield Inn with 17 projects/2,491 rooms and IHG’s Holiday Inn Express with 17 projects/2,065 rooms.

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