New Mideast hotels decline ‘substantially’

The number of new hotels set to open in the Middle East in the coming years has been “adjusted substantially downward’ in a new report by Lodging Econometrics (LE).
According to the report, this year some 59 hotels with a total of 15,558 rooms were expected to open, in 2011 another 76 hotels with 21,141 rooms were set to open and in 2012, 111 hotels with 28,498 rooms were expected to come online.
The report said: “Originally scheduled to open earlier, many projects have slowed and are now being pushed outward. Delayed by the lack of available financing for completion, project and guestroom count decreases from LE’s earlier forecast range from 22 percent to 28 percent per year.”
 “At 427 projects, the Middle East total pipeline is at the lowest level since early 2007. Dubai’s pipeline, with 83 projects is declining rapidly but still has the 5th largest in the world.
“Abu Dhabi, with 67 projects is the 7th largest pipeline. For both, the ongoing devaluation process and the restructuring of balance sheets for governmental entities and banking institutions has seriously curtailed credit. In effect, the building cycle is now near an end.
“Projects already in the ground have slowed considerably and are awaiting additional financing for completion. Other projects will either remain stalled in the pipeline or eventually be cancelled. New project announcements into the pipeline will be minimal into mid-decade as the property market seeks stabilization.”
The report added that the Middle East was likely to face overcapacity in hotel stock.
“The flow of new openings ahead is almost certain to create an overbuilt condition, outpacing the anticipated rate of demand growth in the region.”