Lodging Econometrics (LE), the real estate authority for the lodging industry, released its first Development Forecast for three important specialty sectors of the lodging industry - Timeshare development, Condo Hotels, and for Hotels developing Private Residences.
Patrick Ford, President of LE, indicated that these Pipeline Forecasts for '06, '07 and '08 and beyond predict rapid growth and will be of great interest not only to executives in the lodging industry, but also to developers, investors, lenders, and vendors who operate in the vacation resort industry or who specialize in upscale residential real estate markets.
Ford continued, 'We are delighted to be compiling development activity and forecasting new supply additions for these fast-growing sectors where unit owner demand is being driven by easily-accessed lending at historically attractive rates, by thriving residential development in many urban centers and booming second-home development at high-profile resort destinations.'
Timeshare and Vacation Club Industry Shows Continued Growth in '06 and '07
In 2006, 39 Timeshare projects are forecasted to open, having 3,998 dedicated Timeshare units while '07 will have 27 projects/3,699 units.
The total Timeshare Pipeline currently contains 111 projects being actively pursued by developers with 15,360 units. 56 of those projects are currently Under Construction, 41 are Scheduled to Start in the Next 12 Months, and 14 are in various stages of Early Planning. 41 of the projects contain a total of 3,074 Fractional units. 63% of all Pipeline projects are for new ground-up construction, while 37% are for the unit expansion of existing Open and Operating Timeshare projects.
Casino destination areas are the most popular locations for development with 4,244 units in the Pipeline, or 28% of the total. Oceanside vacation areas and theme park destinations follow, each having 17% of all Pipeline units, then mountain and ski areas with 16%. Las Vegas is the most popular market with 26% of all pipeline units, followed by Orlando with 17%.
Marriott's Vacation Club has 12 company-owned projects with 2,413 units in the Pipeline, while Hilton has four projects with 1,108 units. Cendant's two brands - Worldmark and Fairfield have a combined 14 projects/1,327 units. Ford commented, 'Although the branded vacation clubs are developing most of the large projects, Timeshare is still pretty much a fragmented industry with 74 out of 111 projects in the Pipeline being constructed by smaller local and regional developers.'
Condo Hotel Development is Booming
In 2006, 32 projects with 4,831 Condo Hotel units are forecasted to open while 27 projects/5,025 units will open in '07.
The current Construction Pipeline contains a total of 105 projects with 29,042 condo units, averaging a very high 276 units per project.
44 Condo Hotel projects are currently Under Construction, 41 are Scheduled to Start in the Next 12 Months, and 20 are in Early Planning. 75% of all projects are ground-up new construction, while 25% of the projects will convert existing guestrooms in Open and Operating Hotels to condo units.
The primary purpose of each Condo Hotel project is to function as a hotel servicing regular transient guests. So, most often, unit owners are required to place their units into a hotel rental program when unoccupied, receiving a share of rental proceeds in return. Subsequently, Condo Hotels are usually Upscale, Full-service developments focused in the strongest hotel markets: either popular vacation destinations, or in large cities where suburbanites frequent hotels for business or leisure purposes.
45% of all Pipeline projects are in Oceanside locations, while 10% are near theme parks, and another 9% are at Casino destinations. Florida has the greatest development activity, with 46% of all Pipeline projects. Miami, Fort Lauderdale, West Palm Beach and Orlando are the popular locations.
Ford indicated that Condo Hotels are a significant factor in the lodging industry's growth because without these products that draw such individual investor participation, large upscale hotel projects could not otherwise be conventionally financed and built so early in the industry's economic recovery.
Hotel Construction with a Private Residential Component is Exploding
Another proven way to build Luxury and Upscale hotels in the early stage of a recovery is to include private residences for sale in the project. In the regular Hotel Construction Pipeline, 142 projects are including some form of private residential development - condominium residences inside the hotel and/or condominiums, town houses and single-family homes adjacent to the hotel.
Most all developers will choose a major upscale brand early on as it adds important cachet to the project and communicates a level of amenities and hotel services that often permits developers premium pricing greater than what comparable residential projects in the same community can command, sometimes up to 25% or more.
62% of this type of development is in urban centers or close in suburban locations of large cities where regular residential condominium construction has strong momentum. Another 20% of the development is at the country's most upscale oceanside resort destinations.
Individual Project Records and Sector Forecasts will be Updated Quarterly
Ford said, 'In order to compile these sector Pipelines, each developer was interviewed and an individual project record was created for every project in the Pipeline. Each record will be updated quarterly, adding new project details and revisions as they are announced; including the all-important Construction Start and Completion Dates. All New Project Announcements will be added each quarter and cancellations and postponements will be removed.'
This will result in all Sector At-a-Glance 'Macro Summaries,' which detail projects and unit counts and the two-year Forecast for New Openings, being updated quarterly as well.
Through the month of January, LE clients can subscribe, at special introductory prices, to any of the three 'Sector At-a-Glance Summaries' and the Individual Project Records as their needs might require.
Lodging Econometrics (LE) of Portsmouth, NH is the real estate authority for the lodging industry. LE maintains over 80,000 individual database records throughout the U.S. and Canada.
Records contain important project details including contact information for the Owner, Management, Developer and his project team members.
Customized reports can be designed to meet a company's unique needs: Individual Database Records for project review and Summarial Reports of the various Pipelines, markets, chain scales and brands for Strategic Planning and Forecasting.
To learn more about LE's products and services or to inquire about ordering a customized report, please contact LE at (603) 431-8740 ext. 25, or visit them online at www.lodging-econometrics.com.
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