Hotel Room Supply in Eastern Europe Poised for Growth

According to data from STR Global’s June 2014 pipeline report, Russia, Poland and Ukraine are expected to increase their room supply by adding 18% (32,700 rooms) on top of their existing supply.

These three countries combined will account for 46% of Eastern Europe’s future room supply.

The current room supply in Eastern Europe is heavily dominated by Russia (103,000 rooms), followed by Bulgaria (62,000 rooms), Czech Republic (58,000 rooms) and Poland (56,000 rooms). By the end of 2014, Russia is expected to open 4,355 rooms, while Ukraine and Poland expect to open1,004 rooms and 817 rooms, respectively.

By the end of 2015, Russia is projected to open 5,519 rooms, while Poland and Ukraine are projected to open 1,654 rooms and Ukraine 274 rooms, respectively. Additionally, in 2016 and 2017, Russia is expected to open an additional 46 hotels with more than 10,000 rooms.

Since 2008, Russia had a compound annual growth rate of 4.8% and reported the highest supply growth across Eastern Europe. Coming from a lower room supply, Ukraine has a projected CAGR (through 2016) of 4.1%.

Eastern Europe is showing a CAGR of 2.5% from 2012 until 2017. The Upper Upscale class has the highest growth rate (+18%) among the chain-scale segments. The Upscale class has the highest share of rooms Under Contract (72 properties with 12,000 rooms). Only 10% of rooms Under Contract are assigned to the Midscale and Economy classes, which make up 37% of existing supply in Eastern Europe.