2017 CBRE Hotel Market Outlook

TORONTO — Occupancy remained at a constant 64 per cent for the past three years, while ADR and RevPAR at Canadian hotels have been rising steadily.

TORONTO — While occupancy remained at a constant 64 per cent for the past three years, ADR and RevPAR at Canadian hotels have been rising steadily. Average daily rate went from $137 in 2014 to a projected $154 in 2017. Similarly, RevPAR, which was $88 per room in 2014, is projected to be $99 per room in the coming year.

Domestic pleasure travel is projected to rise by 3.2 per cent in 2017, up from 2.6 per cent in 2015 and 2.3 per cent in 2106 — not a big surprise since Canada is celebrating its 150th birthday, Montreal its 375th and Quebec City its 175th, says Brian Stanford, senior managing director at CBRE Hotels, told CLN. “We're anticipating the growth rate will be a little bit lighter in 2018.”

Domestic business travel, which grew by 0.6 per cent in 2015, is estimated at 1.2 per cent in 2016, and forecast at 2.4 per cent for 2017. This is “one of the more promising signs,” Stanford said. “We're seeing continued growth in Ontario, Quebec and B.C., and though Alberta still has its challenges, the worst is over and things are moving in the right direction.”

The growth in U.S. travel is forecast at 3.9 per cent for 2017, down from growth of 7.7 per cent in 2015 and 7.8 per cent in 2016. “This is a little bit misleading, as 2014, 2015 and 2016 saw huge rebounds and a huge recovery… now that most of the recovery has happened, we are expecting growth of 2.5 to 3.0 per cent per year.”

Across the country, Atlantic Canada was always a weaker performer, but can still expect growth in  2017. “We're not concerned with significant supply impacts, except in St. John's,” said Stanford.

Ontario and Quebec expect very strong growth, thanks for marginal supply, strong travel demand and strong economic growth.

CBRE separated B.C. and Alberta for this year's report, since the outlook for the two provinces is very different.

“BC is on fire, fuelled largely by Vancouver, Victoria and Whistler,” said Stanford. “The balance of the province is relatively slow.” BC's ADR is projected to grow by 5.5 per cent in 2017 and RevPAR growth is forecast at 7.6 per cent.

Expectations for Alberta going forward show a slow recovery. ADR is not projected to grow in 2017, but that's a welcome change from a decline or 1.5 per cent in 2015 and 6.6 per cent in 2016. The RevPAR forecast is for a 1.1 per cent decline in 2017 — much lower than the 14.7 per cent decline in 2015 and 16.8 per cent in 2016. 

Manitoba and Saskatchewan can expect modest improvements in 2017.

The projected RevPAR numbers for the 13 major cities across Canada tracked by CBRE reflected these regional and provincial trends.

Montreal, which celebrates its 375th anniversary this year, leads the pack with about a 9 per cent RevPAR increase projected for 2017. Vancouver, Niagara Falls, Toronto and Ottawa should also experience RevPAR growth of more than 5 per cent. Quebec City, Halifax, Winnipeg, Saskatoon and Regina, should see a 0 to 5 per cent RevPAR increase in 2017.  Resource markets will continue to lag, with Calgary, St. John’s and Edmonton looking at negative RevPAR growth figures.

To download the full report: CBRE Hotels Outlook Presentation 2017