TORONTO — Monique Rosszell of HVS talked about branding, and conversions rather than new builds, as areas of opportunity for Canadian investors at Hotel Market Connections 2016, held at the St. Andrews Club and Conference Centre in Toronto June 16.
She told the audience of investors and hoteliers that 63 per cent of Canadian rooms supply is more than 30 years old. “We are seeing a lot of conversion and rebranding going on, since existing hotels can be picked up for much less than the cost of new builds.”
Only 5.6 per cent of the hotel inventory is less than five years old, which makes sense since new supply has been expanding at a rate of about 1.5 per cent annually. Quebec has the oldest room supply with 73.9 per cent older than 30 years and just 1.3 per cent less than five, while the west has the youngest room supply at 59.1 per cent older than 30 years and 8 per cent less than five.
In Canada, just 24 per cent of hotels are branded, although this represents 50 per cent of the room supply. This means that there are a lot of Mom and Pop unbranded establishments in Canada. In the U.S., 58 per cent of hotels are branded and room count is a much higher percentage since branded properties tend to be much larger.
The percentage increase of branded hotels grew by 1.4 per cent, more than twice as fast as the U.S. rate of 0.6 per cent. But there is far more scope for growth here.
The table below shows some key brands with a comparison of numbers of units in Canada and the U.S. Since the Canadian hotel room inventory is one tenth the size of the U.S., it would make sense that room inventory for each brand here would be 10 per cent of that in the U.S.
Brands shown here don't hit the 10 per cent mark, with the exception of Four Points by Sheraton and element. In the case of Element, the figure was achieved with the addition of just one new hotel last year; there are now two elements in Canada. Holiday Inn is almost bang on the 10 per cent mark.