Of all global regions, Asia Pacific continues to exhibit the strongest recovery from the worldwide recession, the fall-off was briefer and the rebound much faster compared to the rest of the world.

All three operating metrics for lodging – Occupancy, Average Rate and RevPAR – show double-digit year-over-year (YOY) growth increases, the most dramatic improvements recorded anywhere. As a result, every global franchise group with high-end brands has aggressive development programs and continues to see the region as having substantial potential into next decade.

After bottoming in Q4 2009, Construction Pipeline totals for Asia Pacific have grown for three quarters in a row and now stand at 2,009 projects/484,161 rooms. Growth patterns, however, are not uniform throughout the region.

China is the world's third largest economy and the fastest growing.

The country's Pipeline has been increasing for seven consecutive quarters, and has now surpassed the decade's previous peak reached in Q2 2008. At 1,248 projects/336,349 rooms, China is the second largest country Pipeline in the world.

Most dramatically, with 986 projects/264,382 rooms, it has 35% of the world's projects and 44% of rooms presently Under Construction. For perspective, China's Under Construction numbers are larger than the entire Pipelines of every other global region, except for the United States. In Q3, China has the largest number of Construction Starts in the world, and the second largest number of New Projects Announced into the Pipeline, trailing the United States by a mere 887 rooms.

India is the world's 11th largest economy and the second fastest growing.

At 454 projects/79,915 rooms, it has the third largest Pipeline globally and has been trending upward for three quarters. India is often mentioned in the same lodging growth conversation as China, but Pipeline scale is quite different, as India's project count is only 36% of China's and, by rooms, just 24%.

As lodging development continues at an accelerated pace in China and India, concerns about these superheated economies are rising. Fueled earlier by massive government stimulus and directed lending programs, China's recent increase in interest rates and its six attempts to expand banking reserves during the year have not as yet successfully cooled the economy. There is a growing property bubble and an increasing number of highly leveraged loans that are likely to sour.

More recently, rising inflation has become a concern. In November, the Consumer Price Index increased 5.1%. Driven by housing and food prices, it is the largest inflation uptick in three years. India's economy, a quarter of the size of China's, has seen inflation soar, recently hitting 8.5%YOY. These factors could eventually temper developer sentiment as more tightening is expected for the near-term.

Asia Pacific Highlights

After seven consecutive quarters of growth, China's total Pipeline is at 1,248 projects/336,349 rooms. The Chinese government's stimulus and directed lending programs, as well as low interest rates, have invigorated developer sentiment and lodging construction.

This renewed impetus is readily evident in Construction Starts, the rate of project migration up the Pipeline toward construction, which have accelerated in recent quarters, as the availability of financing has facilitated projects getting into the ground. At 223 projects/45,288 rooms in Q3, China has the highest number of Construction Starts of any other country or even any region in the world.

New Project Announcements into the Pipeline are also at new highs. With 215 projects/41,387 rooms, it is the second highest amount in the world for Q3. Apart from the United States, one would have to combine New Project Announcements from rest of the world to rival the count in China.

With an astonishing 79% of total Pipeline projects and rooms already Under Construction, China's New Openings are scheduled to exit the Pipeline at accelerated rates. China will have the highest number of rooms coming online annually through 2012 of any country worldwide. LE's Forecast for New Hotel Openings expects 765 hotels/116,465 rooms to open in 2010, with 449 hotels/92,830 rooms in 2011 and 290 projects/93,353 rooms in 2012.

India's total Pipeline has reached 454 projects/79,915 rooms following three straight quarters of rising counts. As in China, global hotel companies are flocking to India. Some companies with predominantly Upscale and Mid-market brands have embarked on strategic ventures with local developers to accelerate their growth plans.

Over half of India's Pipeline, 225 projects/41,614 rooms is Under Construction presently. The country is poised for new cyclical highs for New Openings each year through 2012. LE's Forecast for 2010 calls for 56 new hotels/8,793 rooms to come online as new supply. New Openings will increase in 2011 to 88 hotels/14,057 rooms, and again in 2012, with 91 hotels/18,036 rooms.

While China and India generate enormous development enthusiasm, they generally mask the fact that Southeast Asia and other areas have flat or slowing Pipeline growth. Outside of China and India, aggregated Pipeline growth in the remaining countries has been in decline for seven consecutive quarters since the peak in Q4 2008. Pipeline counts in these countries are likely to continue to decrease in the upcoming quarters.

New Project Announcements into the Pipeline will remain in a low channel. A sizeable 59% of projects are currently Under Construction, much of which will exit the Pipeline as New Hotel Openings through 2012. Many projects are large, Luxury, Upper Upscale and Upscale properties in central business districts and resorts, with a majority located in the Southeast in countries like Thailand, Vietnam, Indonesia, and Malaysia.

The global lodging community and real estate industry rely on LE as trusted advisors and as a source of market intelligence to construct successful Growth Solution ProgramsTM. LE's customized programs include the identification and presentation of available growth opportunities in every country and region.

www.lodgingeconometrics.com