Canadian markets awesome, except St. John's

TORONTO — Brian Stanford, senior managing director at CBRE Hotels, described the Canadian hotel market as “awesome.” The only place that shows negative growth is St. John’s, N.L.

TORONTO — Brian Stanford, senior managing director at CBRE Hotels,
described the Canadian hotel numbers as “awesome” in the company's latest Canadian Hotel Market Outlook.

The only place that shows negative RevPAR growth is St. John’s,
N.L. St. John’s is a resource-driven market, and there has been some erosion in
demand. But more importantly, there are significant increases in supply. “It’s
80 per cent supply driven,” said Stanford. “There’s a new Alt, Sandman Signature and Best
Western.  But the market will grow out
of it.”

“Three years ago, Calgary, Edmonton, Saskatoon, Regina and
St. John’s experienced declining demand due to resource markets. Supply curves
have slowed or stopped in the western markets, and the pain has at least slowed
in those markets. We’re a year away from St. John’s getting out of the bottom.”

Big three cities on

Canada’s three largest cities, Vancouver, Toronto and
Montreal, are all doing extremely well.

Vancouver is on fire — standing at 80 per cent occupancy,
including the suburbs.  It’s tough to
make things work from a development perspective. Land is a huge cost and quite a
barrier to entry.  “It’s a good time to
be an owner in Vancouver,” said Stanford. 
Surprisingly, Vancouver, Victoria and Whistler are driving B.C.’s high
numbers.  “The numbers aren’t that high
in the rest of the province,” said Stanford.

The Toronto market, which includes suburban markets such as
Scarborough, Mississauga, Brampton and Vaughan, has had 75 per cent occupancy
for the past three or four years.  “We
have hit functional capacity downtown, and there’s now a push towards the
suburbs, to the airport strip, to the east and to the north,” said
Stanford.  “There are pockets where
supply growth has started to happen. It’s a healthy market for the next three
to five years.”

The Toronto downtown market will get even tighter over the
next few years, as there is the potential for hotels to come off the
market.  The Park Hyatt has closed and
will reopen in a different form, and other downtown hotels have longer term
plans for closing and repurposing.

Ontario as a province saw 70 per cent occupancy.

Montreal is expected to have 73 per cent occupancy city-wide
in 2018, with 74-75 per cent in the downtown core. Dorval, Laval and the South
Shore have seen a huge uptick in business, as a lot of groups take a harder
look at Montreal.  Outside Montreal and
Quebec City, the province is performing well.

I must have a
hotel — where should it be?

Brian Stanford, CBRE Hotels

Brian Stanford, CBRE Hotels

Since performance is so strong, Toronto hoteliers are
holding on to their assets, and anyone who wants to buy in that market will pay
a premium. The opportunities are in Southwestern Ontario, Stanford said. “The
[highway] 401 corridor west through London and east through Kingston, and even
Ottawa, provide more opportunities than they have in the past,” he added.

Winnipeg is a market that hasn’t seen a lot of development
lately, but it continues to grow. There are a lot of discussions underway, as
investors see things going in the right direction.

Alberta and Saskatchewan are a good news/bad news story,
said Stanford. “Those markets have finally bottomed out — we don’t expect any
growth in profits, but we don’t expect any erosion either. The good news is
that there is more investment interest in Alberta as groups can acquire assets
below replacement value. Their attitude is, I can finally get into this market
now that the worst is over.”

Webinars for HAC

CBRE is conducting free quarterly market outlook webinars for Hotel
Association of Canada members. The next 60 minute, interactive webinar is on March 27 at 2:00 p.m. EST.  For information, contact Gary Graham at HAC,