China's Hotel Construction Pipeline Has Grown to Record Highs

A new report from Lodging Econometrics (LE) stated that at the end of Q3 2019, China has 3,380 projects that house 628,972 rooms in its hotel construction pipeline. At the moment, China has 2,548 projects that house 438,797 rooms under construction, and over the next year, 404 projects with 85,026 rooms are scheduled to begin construction.

China has 428 projects with 105,149 rooms in the early planning stages, and hotel development in the nation seems to be stable, despite other parts of the economy that are facing setbacks. The US / China trade war has impacted both nations. Regardless, China added 661 new projects with 80,692 rooms to its hotel construction pipeline in Q3 2019.

During Q3 2019 658 new hotels that house 92,932 rooms opened in China, and another 363 new hotels with 45,799 rooms are scheduled to open by the end of 2019. Next year, 1,084 new hotels with a staggering 157,893 rooms are set to open to the public.

In the event that all of these hotels open in 2020, China will be adding the highest number of hotel rooms since the last cyclical peak in 2014. LE estimates that China will open 73 hotels with 135,294 rooms, which suggests that the next cyclical peak is near.

Here are the Chinese Provinces that are leading the hotel construction boom, listed in order of projects (highest to lowest):

• Chengdu - 124 projects / 25,560 rooms (a record high)

• Guangzhou - 122 projects / 26,105 rooms

• Shanghai - 119 projects / 22,581 rooms

• Wuhan - 111 projects/15,457 rooms

• Suzhou - 88 projects/14,855 rooms

• Xi'an - 80 projects/15,054 rooms.

• Hangzhou - 73 projects/15,647 rooms

Of the cities listed above, four of them have seen a pipeline increase of more than 20% over their existing operating hotel space. Chengdu has seen that metric rise by 30% and is adding hotel rooms at a record pace.

Major hotel chains are adding capacity to their hotels in China. Of them, the most aggressive is  Hilton Worldwide. It is adding 454 projects with 93,644 rooms to its pipeline, followed by InterContinental Hotels Group (IHG) which is adding 375 projects with 82,358 rooms, and then Marriott International which has 315 projects that house 86,151 rooms in its construction pipeline.

The three companies above are adding a record amount of new hotel capacity to their construction pipelines, and account for 34% of the total amount of new construction in the pipeline. AccorHotels is also adding new properties to its pipeline, with 218 projects that house 35,556 rooms. Jinjiang Holdings is the fifth chain on the list, and it has 214 projects with 22,548 rooms in its pipeline.

Here is a breakdown of how the chains are adding capacity:

Hampton by Hilton - 273 projects with 42,645 rooms (a record for the company)

DoubleTree (Hilton) - 59 projects with 16,489 rooms.

IHG's primary brands in China:

Holiday Inn Express - 179 projects with 31,430 rooms (a record for the company)

Holiday Inn - 61 projects with 15,435 rooms (a record for the company)

Marriott International:

Marriott Hotel & Resort - 73 projects with 22,068 rooms (a record for the company)

Courtyard - 39 projects with 10,250 rooms

JinJiang Holdings:

7 Days Inn - 113 projects with 8,931 rooms

Vienna Hotel - 26 projects with 3,300 rooms

AccorHotels (both at record levels):

Ibis - 102 projects with 10,888 rooms

Mercure Hotel - 58 with 9,346 rooms