TORONTO — PKF Consulting Canada, a CBRE company, said that while the focus is on the negative impact of the resource sector in Alberta, Saskatchewan and Newfoundland, other parts of Canada are having a very good year. That's the consensus of panellists at the company's Outlook Forum held in Toronto this morning.
Canada's GDP has been rising for the past 7 years. This year, the rise was just 1.4 per cent, but Alberta, Saskatchewan and Newfoundland were the only markets that noticed the recession. For the rest of the country, Canada's GDP rose by 2.5 per cent. That's better than last year's rise of 2.4 per cent or the projection for 2016 of 2.2 per cent.
Bill Stone of CBRE noted that it's been a robust year for transactions across the board, with a total transaction volume of $2.2 billion — not quite the $4.0 billion volume of 2006/07 which saw the Legacy and CHIP REIT deals, but healthy. Canada was 10 per cent more active than the U.S. “It's all about Toronto these days,” whether we're talking about the downtown core or the suburbs — the Greater Toronto Area was responsible for 53 per cent of all the activity across the county, Stone said.
There has been growth of hotel supply in all markets — averaging 0.6 per cent in 2014, and a projected 1.5 per cent and 1.3 per cent in 2015 and 2016 respectively. Demand should surpass supply in 2016. National occupancy was 64 per cent in 2014 and PKF is projecting 64 per cent this year and 65 per cent in 2016.
ADR growth was 3.7 per cent across the country in 2014, forecast at 3.9 per cent for 2015 and projected at 3.5 per cent for 2016. National RevPAR growth was 6.3 per cent in 2014; forecast at 3.4 per cent for 2015 and projected at 4.7 per cent for 2016.
“Last year was pretty positive, but the last four months of the year were better than anticipated,” said Brian Stanford of PKF. RevPAR was running at 4.0 per cent; then in the last four months of the year it rose to more than 6.0 per cent, “a pleasant surprise,” he noted.
“2015 showed some of the best numbers we have seen for awhile,” said David Larone of PKF. RevPAR was up 5.0 per cent overall, but down 8.0 per cent in Alberta, he pointed out. BC's RevPAR was up 24 per cent in the month of June. “The industry is starting to get its second wind at driving rates,” he noted.
“In terms of rate growth, a huge part of the recovery is attitude,” said Stanford, adding that hoteliers now have confidence in their ability to drive rate. “That attitude shift is positive from an investment point of view,” he said.
A look at 13 major markets across the country tells the story. Vancouver's RevPAR for 2016 is projected at $126; Ottawa at $116, Montreal at $114 an both Toronto and St. John's at $107. Calgary sits right in the middle of the 13-market ranking at $104, Saskatoon at $99 and three resource-based markets bringing up the rear: Edmonton at $83, Winnipeg and $81 and Regina at $73.
Stone noted a big shift in where transaction business is coming from. “Three years ago we wanted to move our Vancouver office to Calgary, but now we would want to move it back to Vancouver. The focus on Alberta has switched to B.C. now.”