Asia Pacific Hotel Construction Boom | Bruce Ford, Lodging Econometrics

Glenn: Everybody. Hospitality. Friend. Glenn here. Listen, we already know actabl gives you the power to profit, but now they’re giving you more actionable insights to drive that profitability. Do me a favor. Take a moment and check out HotelData.com. You’re getting set for budget season, right? And this new benchmarking data is going to help compare your hotel’s performance for the rest of 2025 and into 2026. Please check out hoteldata.com or the classic.actabl.com. Have a great day and enjoy the show! Hey everybody, it’s your hospitality. Friend Glenn here back with another episode helping you understand what’s going on in the global pipeline and the analysis behind the numbers that you see. Joining us once again, I couldn’t do this on my own. Well, I could, but it honestly kind of suck. That’s all I got. Our friend Bruce Ford, SVP of lodging Econometrics, back to go over all of his numbers. Bruce, today we’re going to be talking about Asia Pacific with China and then without China.

 

Bruce: Because it is very different. Glenn, it’s great to be back with you today. Some of the trends that we see in Asia are kind of started in China, but then it wraps up with the rest of the region, if you will. Also, China uniquely really stopped construction in all fronts during the pandemic. So the openings that are coming in China are long held, legacy type projects that have been sitting dormant for a little while, that are now wrapping up and getting ready to open. So a lot of big, full service, lots of upper upscale and luxury, and even for the first time, really upscale in China. Not a segment that had a lot of bandwidth in the region. So many Western brands coming to China for the first time with their upscale offerings.

 

Glenn: Bruce, could you give us an example of a couple of brands that fit within that upscale offerings for our audience?

 

Bruce: Sure. So upscale is typically kind of the highest end select service. It’s where Courtyard by Marriott. Hilton garden Inn. And from an extended stay standpoint and legacy residence in and Homewood suites but also upscale is where many of the boutique style properties as well kind of come in with the AC, which is also going to have a significant amount of locations in China. And for the upscale market, also, it’s a significant place for IHG, as they have the Crowne Plaza brand as well as the Garner conversion brand.

 

Glenn: So it’s kind of Bruce, it sounds like it’s kind of in at the intersection between Select Service, full service and what I call quasi full service without the full panoply of offerings. So that, to me, without looking at the numbers, says that maybe the the Chinese market is starting to mature as it gets a more variety of product.

 

Bruce: That would be an accurate statement, Glenn. Excellent. The the Westernization of hotels in China has been a has been on the dock for a long time, and it’s really just kind of starting to penetrate the marketplace because in the US, even in Europe, even in Latin America, in the urban centers, the new $300 a night hotel is a Courtyard by Marriott. You can’t no longer get an upper, upscale hotel at 300 US a night. In many of the urban centers across the world, it just doesn’t happen anymore.

 

Glenn: You are correct. So all right, so let’s see the numbers again. We’re going to take a look at China, which was down for construction, inordinate amount of time compared to like here in the United States and Europe. So what are we seeing here today?

 

Bruce: So again, the first column is adding up the three active pipeline project stages of under construction, scheduled to begin construction in the next 12 months and then announced and verified, which is early planning. So those three things added up today, say, 672,000 rooms in the construction pipeline in China. How does that compare with the United States? The Us has seven. 32. Okay. So pretty close. 2025 opening so far in the first half doesn’t seem very significant. With only 48,000 rooms. The second half will be triple that. Okay. And this is again, the repositioning of the marketplace. These are hotels that were some of them were already under construction during the at the beginning of the pandemic and stopped. Some of them were ready to begin the year after and didn’t begin. So it takes a little longer to build a hotel in China. So you get an urban center property. It’s going to be 80 stories. That’s how they build a big they build there, and it takes 4 to 5 years to construct the building, outfit the building and open it.

 

Glenn: Although some buildings in China are built overnight, which is kind of crazy as well. But also I think Bruce, from my recollection of China, a product in China might have more restaurants and other elements as well than something you might find in the United States.

 

Bruce: Typically, in an urban center, they actually are connected to malls a lot. Retail is a big part of the overall luxury experience. In addition to that, they will have not only their own in-house restaurant, if you will, but they also likely have leased restaurant space. And it’s not abnormal for a full service mall located retail location in an urban center to have as many as 7 or 8 different restaurants and and sometimes a rooftop bar, a nightclub, a pool, side bar, all different types of things.

 

Glenn: Wow. Really shows you the the different dynamics that are at play in certain countries versus other countries out there. Any other observations we should be taking away from the China construction pipeline before we look at the rest of Asia Pacific?

 

Bruce: Certainly at this point, the rise in upper upscale, so we’re going to go from 18 openings in the first half of this year. 36 in the second half, 64 next year and then 89 in 2027. Now again, this new forecast to the far right hand column is brand new from Lodging Econometrics. We put this new annual year out there at the mid year each year. So we have premiere 2027 forecast openings across the world is part of this series. This is the reason we want to talk about it, because at the end of the day, people are working on the assumption that new construction is dead, right? It is. It is really not okay. And in terms of new construction, when is it going to open? There are specific types of hotels that are regional, indigenous to the region, if you will, certainly full service in China, but also full service throughout. Ap is a big, big story in the US. Just to give you an example, we have about 230 30 luxury projects. China. They got 257. But we will find in Asia is that it’s even significantly higher than that. All right. And when we’re looking in China now, it’s really kind of cities. Six through 16. Okay. So yeah, when you’re looking at these, it’s you notice it doesn’t say Hong Kong. It really doesn’t say some of those other major markets, we’re kind of in Chengdu. Guangzhou. And if you can put a pin on the mat where some of these are, I will give you a gold star. Okay. But and you can see bigger there.

 

Glenn: And they’re all bigger than like New York, right.

 

Bruce: Beijing’s not even on the list. Glenn. Right. Okay. So?

 

Glenn: So Beijing and Hong Kong not being on the list. Is that.

 

Bruce: Macao either?

 

Glenn: So. Right. Macau is like. Seems to me pretty full with properties already. Is that similar to the to Beijing in Hong Kong or are there other. Yes. Okay. So it’s more of a maturation issue as opposed to a financial issue.

 

Bruce: That’s why I say it’s Mark at six through 16. That’s China’s really trying to build world class cities and market six through 16. So that would be pretty normal for this time in the cycle. I think if we had Hong Kong and Beijing up here, up here, what we would find is the hotel room, hotels that are being built there are smaller. There’s not much full service. Largely because it’s already there. Okay. And there’s not much, much more space for a lot more full service development.

 

Glenn: Yeah, particularly in Hong Kong. Unless you want to build more land over there.

 

Bruce: They’re going to float it in next week. Yeah, actually, in two weeks. Glenn. Yeah, everything’s two weeks. Two weeks.

 

Glenn: That’s. That’s really funny. All right, so let’s take China out of the picture and look at the wider region out there.

 

Bruce: So now this is Asia Pacific without China in it. So this is everywhere else other than China. So Japan is included all the way down to Australia. Thailand. And Malaysia. Singapore India is part of this list as well. So again first column total construction pipeline pretty impressive 409,000. If you add it up, China and the remainder of Asia Pacific, you had 1.1 million guestrooms in the new construction pipeline.

 

Glenn: I’m going to guess that sounds like a lot to me, isn’t it?

 

Bruce: It’s about half of what is happening around the entire world. So is basically happening in Asia. Okay, so the opportunity there is pretty vast. But again, once you get outside of China, the game kind of changes. Okay. So this is supply that was signed right at the beginning of the pandemic, perhaps just before that is now beginning construction in 23 and 24. Okay. And in some cases, continuing to grow the pipeline and putting a new focus on a market like India. So in India, what you’re going to find is, is that pipeline has doubled in the past 18 months. Number one. Number two, it is kind of those markets 6 to 16. Also just like China because the major urban centers are largely developed. Okay. And so you see something like the smaller towns in India. And I’d actually say that it’s a little bit difficult to really kind of put it all on the market, because everywhere is getting 4 or 5 things right. And those, those cities, albeit pretty large, are not necessarily recognizable or even something that people would elevate to immediately. So what I would say is that if you have interest in India, we have plenty of data. Okay. But putting up cities and towns is not necessarily the best way to show it. But there is 790 projects in India right now.

 

Glenn: Which 790 projects in India right now. So is that a lot? Not a lot. India is pretty big place, Bruce.

 

Bruce: 700 would be about a third of the pipeline. Not in China. In Asia. Wow. And that’s just so that’s a third just in India. And you can see that for Vietnam and Thailand. Those are long term legacy projects. I was talking with a person about Vietnam the other day. In Vietnam today, there are 16 properties that are going to open the remainder of this year that are over 500 rooms. Two of them are over 1000. One is 4000 rooms opening in Vietnam. So these are long term legacy projects that are coming to fruition and opening for the very first time.

 

Glenn: Nice. All right. Any any other observations we should make?

 

Bruce: Bruce, I think expressing the way it’s going in Asia Pacific, non China is a little bit more of a tilt towards the lower end of the market, getting more upscale, more upper mid scale, more mid scale, more economy as we’re filling out.

 

Glenn: Right. That makes sense. I’m sorry. I’m sorry to cut you off, but, I mean, I feel like, based on what I’ve seen in the maturation of China, India is following the same pattern where you have the lowest, the lower end of hotels and the high, high end hotels. And then as the market matures, people start to build out into the middle. Yeah, that’s the thing. Yeah.

 

Bruce: Yep. That’s exactly how it’s going to go. Glenn. And we’re seeing conversions, really, for the first time in Asia Pacific, where you have an existing hotel that’s going to change its brand. That is a growing trend, not a trend that has hundreds and hundreds of projects at the moment. But it is growing and it is growing at double digit pace. And probably the next time we get together in the third quarter. Glenn, we’ll talk a little bit more about that.

 

Glenn: Excellent. But I know people are going to want to talk to you way before those numbers come out. How can they find Hebrews?

 

Bruce: So you can find lodging econometrics on LinkedIn as well as visiting our website lodging econometrics. Com in there there’s a section called Global Insights if you desire to read any of our press releases or looking for more information about lodging econometrics, that’s a great place to start. We’re offering project databases to any supplier client, as well as franchise company and or owners who are interested in the change in supply and the growth in their markets. We think it’s more than just new construction. It’s a confluence of both new construction, renovation and conversion where you would get the most impact on information to assist you in growing your business and your portfolio.

 

Glenn: Beautiful. Make sure you reach out to Bruce Ford. And until next time when we come back, Bruce, we’re going to be talking about what what region.

 

Bruce: We’re going to go to Europe, Middle East and Africa. Next.

 

Glenn: Glenn, give me stay tuned for that one. Come in next week right back here on our special Construction Pipeline series. Thanks, Bruce, for being here. And thanks to all of you for watching. And we’ll see you right back here next time. And I should say, in the meantime, check out our podcast wherever you get your show. See you later. Bye, everybody.