HVS compares Canadian and U.S. hotel scene

TORONTO — The Canadian and U.S. hotel markets are very different, Monique Rosszell of HVS told hotel owners, investors and financiers at the second annual Hotel Market Connections held Sept. 17 in Toronto. This was HVS’s second annual Hotel Market Connections event, celebrated in 20 offices around the world.

The HVS Team. Back row: Louis Barruel, Scott Rosenberg, Monique Rosszell, Charlie Shi, Tamsin Venter. Front row: Anastasia Ivanova and Selina Lai

The HVS Team. Back row: Louis Barruel, Scott Rosenberg, Monique Rosszell, Charlie Shi, Tamsin Venter. Front row: Anastasia Ivanova and Selina Lai

The United States has about five million rooms compared to Canada at 435,000, Rosszell said. The big difference is when it comes to brand affiliation. In Canada, only 24 per cent of hotels are branded, with the other 76 per cent consisting of many independent and 'mom and pop' hotels. In Quebec in particular, the mentality is not to brand as much. 

What's interesting is that the 24 per cent of branded Canadian hotels make up 50 per cent of the rooms. This means there is a tremendous opportunity for branding in the Canadian market.

In the U.S., 58 per cent of hotels are branded making up 70 per cent of room supply.

“There is a lag — Canada is often catching up with the U.S. when it comes to increasing branding in our hotel market,” Rosszell said.

Among Canada's approximately 7,500 properties, Ontario has 38 per cent of supply, B.C. 19 per cent and Quebec 17 per cent, but Alberta is catching up and matching Quebec with 17 per cent.

Seventy-five per cent of Canadian hotels are more than 20 years old, meaning there is an opportunity for new-built hotels to come into the country. The oldest supply is in Quebec because the unbranded hotels are not subject to the PIPs (property improvement plans) required by brands. Only 7 per cent of Canadian hotel stock is less than five years old.

Canada's extended stay supply is not nearly as much as the U.S.

Supply growth has gone from a low of 0.5 per cent from 2012 to 2014, to 0.9 per cent this year, and a forecast of 1.7 per cent for each of 2016 and 2017 according to STR/HVS. One of the reasons supply has not grown quickly is that Montreal took 2,000 rooms out of the supply and Ottawa took 1,000 rooms out. The 1.7 per cent levels in the coming two years are higher than in any of the years since 2006, Rosszell said.

Saskatchewan and Alberta have the greater amount of new supply, with a projected 1.2 per cent by the end of the year. And from 2015 to 2018, HVS projects that the largest amount of new supply, 37 per cent, will be in Alberta, followed by Ontario at 26 per cent, B.C. at 12 per cent and Saskatchewan at 11 per cent.