Too Many Hotels?
Our World | On 01, Nov 2012
Last week I read with interest that Marriott will grow its existing portfolio in Russia & CIS by more than 50 percent by 2015.
Marriott is on track to double its portfolio in Europe from 40,000 rooms to 80,000 rooms by 2015. The European President for Marriott said, “Over the past 15 years we have developed a strong presence in Russia and CIS and are excited about the continued growth opportunities throughout the region for our expanding portfolio of brands.” This growth will include 11 new hotels from a gold resort at the 2014 winter Olympic venue of Sochi and a beach resort in Baku to more business hotels in Kiev and Moscow.
This news prompted me to look at just how many new hotel openings had taken place in 2012 and were planned over the next couple of years. The answer is staggering. At a time of global economic downturn, video conferencing, rising fuel costs and sustainability pressure there seems to be no end to the demand for travel – good news if you’re in the travel business!
Of course it’s not just Marriott who are expanding, Hilton, Starwood, Four Seasons, IHG, Wyndham, Hyatt and Accor have collectively opened 32 4 or 5 star hotels in the last 30 days! And this growth is not confined to “new territories” or “emerging markets”, many of these are in existing, so called “mature” markets like London, New York, Barcelona and Boston.
So where are the people going to come from?
Economics and technology would say that in the face or ever increasing travel costs and ever better and faster access to mobile communications, surely there should be a downturn in people travelling. Clearly the strategists at hotel companies don’t think so and the airlines seems to agree as they continue to add more routes and fly fully booked, if not oversold.
Perhaps US President Teddy Roosevelt was right when over 100 years ago he said, “if you build it, they will come”. It’s certainly true in places like Las Vegas which has doubled its room capacity over 15 years to a staggering 170,000 and despite not really re-inventing itself, seems to keep on going. And who opens new hotels in a city after events like the Olympics – well apparently quite a few people do.
I know there are 7 billion people on the planet, but people have been building more, bigger and better hotels all my life and billions are now being invested every month in planning, developing, building and renovating global hotel stock with literally hundreds of thousands of new rooms planned over the next decade.
Don’t get me wrong, as someone who makes a living from the events industry I am certainly not complaining, but I am asking, is there a tipping point? Has someone somewhere with a very big calculator worked out the optimum and maximum number of bedrooms that can be supported? If so, are we close or are we actually on a never ending upward escalator supporting hotel growth well into the next century?