VANCOUVER — Wall Street has its bull and Vancouver has its bear (and cub), in front of the JW Marriott Parq Hotel. The Vancouver hotel market is anything but bearish as hoteliers found out at the Western Canadian Lodging Conference held at the hotel Nov. 19 and 20. CLN learned about more than 14 western markets from Carrie Russell of HVS and Scott Duff of CBRE.
Canada-wide, RevPAR has risen dramatically since 2009, from $74 that year to projected $119 in 2020. Occupancy has been on the rise from 2017, when it was 65.9 per cent, to this year when it is projected to increase to 66.5 per cent. The trend is expected to continue with 67.0 per cent occupancy predicted for 2019 and 67.7 per cent forecast for 2020.
Average daily rate (ADR) grew by 9.2 per cent in B.C., was up 2.9 per cent in Alberta, down 2.0 per cent in Saskatchewan and up 1.9 per cent in Manitoba. “At 9.2 per cent, B.C. was off the charts,” said Russell.
“Alberta and B.C. are like too different planets,” she added, noting that Saskatchewan has yet to catch up on rate.
Supply growth was the same as the national level, 1.0 per cent, but the planning pipeline is growing — bursting perhaps — with almost 6,000 rooms, many in mixed use projects, said Duff. Many projects are in the midscale and upper levels of hotels. There are 169 projects encompassing 37 brands.
Demand grew by 0.5 per cent in B.C., 4.0 per cent in Alberta, 6.6 per cent in Saskatchewan and decreased by 0.2 per cent in Manitoba.
Demand growth in Alberta and Saskatchewan outstrips the rest of the country. “Things are growing in Alberta and Saskatchewan, moving in a positive direction, though they're not back from historic lows by any means,” Russell said.
Here is what is happening in different areas across the West.
Winnipeg: Last year was a boom year with the Museum of Human Rights putting the city on the map, said Russell. Things were rockier in terms of new supply. The city doesn't push its average room rates, and there will be significant new hotel rooms in the city. The new rooms pipeline shows 235 rooms coming online in 2019 and 290 rooms in 2020. The new growth includes a Hyatt Place, a Hyatt House, a Residence Inn/Fairfield expansion and a Best Western Premier.
Manitoba: There were two hotel sales Brandon, a Motel 6 and a Days Inn, both sold by Dave & Melody Brooks. The buyer was local, operating under the names Brandon South Hospitality and Brandon North Hospitality.
Saskatoon has had a tough year, while Regina has had a strong year. This might reverse itself next year, said Russell.
Saskatoon's RevPAR, which declined by 4.0 per cent in 2017, and by a projected 0.9 per cent this year, is projected to rise by 4.8 per cent next year. Supply increases will be moderate and demand will be generated by strong group business.
Saskatoon saw some rebranding, with the Radisson Saskatoon becoming a Delta and the Delta Bessborough changing to another Marriott brand, The Autograph Collection. Within the city, there are 750 rooms controlled by Marriott. Occupancy dropped to 63 per cent.
“Regina, take a deep breath, gather your thoughts and move forward,” said Russell, “because the events of 2018 are not repeating themselves.” Group and event demand boosted the city's performance in 2018, but demand is expected to decline by 1.0 per cent next year. There is no new room supply on the horizon and rate growth continues to be a challenge.
Saskatchewan deals included the Best Western Plus Moose Jaw, Super 8 Swift Current and Comfort Inn Yorkton.
Edmonton rates were down 1 per cent this year, but next year, there are reasons for a rebound, said Russell. There is potential for growth in the energy sector; a new oil sands project has been announced; and LNG will generate pipeline and drilling activity.
On the other hand, supply growth — 861 new rooms in 2019 and 505 in 2020 — is expected to keep occupancy below 60 per cent. One of the larger projects is the JW Marriott ICE District. Russell reflected that seasoned Alberta developers in the midscale space decided to build in the softer part of the economic cycle, but that things are taking longer than expected to turn around.
Calgary airport demand is up 10 per cent, and there are many good indicators for the city in spite of the bouncing price for oil. Both demand and occupancy are up, tourism convention activity is is healthy, and there are positive signs with oil and gas capital spending. The uncertainly around pipeline development is a factor.
While the Travelodge closure took 247 rooms out of the supply equation, there is significant new supply on the horizon. The pipeline shows 1,087 rooms for 2019 and 495 for 2020, including the ALT Calgary East Village (see related article), Residence Inn Calgary Beltline, Holiday Inn Calgary South Deerfoot Meadows, Hyatt Place Calgary Airport, Fairfield Inn Calgary Airport North, Holiday Inn Calgary Airport North, The Westin Calgary Airport and Best Western Residency Calgary Airport.
The biggest transaction was the Ramada Plaza & Conference Centre by Wyndham Calgary Airport, a 213-room property that sold for $12.5 million or $59,000 per key.
Banff (including Canmore) was one of the best markets in Canada. Occupancy is reaching peak levels based on seasonality. There is continued potential for rate growth, in a market where RevPAR has grown from $98 in 2009 to a whopping $229 projected for 2020.
Thompson/Okanagan area demand was affected by the forest fires last summer, with a projected drop of 0.1 per cent in 2018. New supply and modest demand growth are expected to hold occupancy levels flat — hovering around the 60 per cent mark. This region has not been able to push average rates as strongly as other tourist areas. RevPAR is projected to be $88 by 2020, compared to $55 in 2009. New projects in this area include the Coast Hotel Oliver, Wingate Kamloops. Holiday Inn Express Kelowna, Microtel Kelowna and Hyatt Place Kelowna. These projects will increase the number of rooms in the area by 122 next year and 161 in 2020.
The Holiday Inn Express Kelowna and Conference Centre was sold to Bacchus Hotel Group Ltd. for $22 million or $120,000 per key and has been renamed the Kanata Kelowna Hotel and Conference Centre.
Vancouver continues to push growth beyond expectations, with RevPAR growth of 11.6 per cent projected this year. The RevPAR increase has been astronomical, rising from $105 in 2009 to a projected $233 in 2020. “Such incredible growth and supply is almost non-existent,” said Duff. The only new rooms Vancouver will see next year are those in the 188-key EXChange Hotel, an Executive Group mixed-use project. There are no rooms on the books for 2020. Supply growth is in check and the fundamentals look strong for the future.
Hotel sales included the 357-room Empire Landmark Hotel and Conference Centre, the 269-key Coast Plaza Suites Hotel Stanley Park, Comfort Inn Vancouver Downtown, and Howard Johnson Downtown Vancouver, the latter two bought by Pacific Reach Properties. The Comfort Inn Vancouver Downtown will be converting to Hotel Belmont, An Ascend Hotel Collection Member. Ascend is Choice's soft brand.
Vancouver Airport market continues to grow and expand, as compression has resulted in strong rate growth. The market is aggressively renegotiating crew and tour contracts. There will be limited supply growth in the future, and occupancies should be in the 82-83 per cent range. The market will see 55 rooms added next year and another 55 in 2020. New hotels include the Opus Versante Richmond.
The pipeline for Surrey/North Vancouver includes the Civic Hotel, Autograph Collection now open in downtown Surrey (see related story) and the Seaside Hotel in North Vancouver. Langley and Chilliwack will get the Courtyard by Marriott Langley and the Holiday Inn Express Chilliwack.
Notable sales include the Four Points by Sheraton Vancouver Airport and Holiday Inn Express Metrotown (Burnaby).
Victoria is the strongest growth market in Canada in 2018, with a projected RevPAR increase of 14.3 per cent. RevPAR was $79 in 2009; a projected $133 this year; and a forecast $147 by 2020. There is no new supply proposed in this market, and the economy is benefitting from the U.S. dollar and the strength of the U.S. economy.
Whistler's rate growth potential rivals that of Banff. Supply growth is limited by the municipality and Vail Resorts continues to make major investments into infrastructure and marketing. “Vail makes Whistler more of an international market, and the EPIC Pass [which applies to various Vail Resorts including Whistler] brings wealthy Americans to the area,” said Russell. Another interesting development is the innovative Pod Hotel, which has a trendy little restaurant.
Northern B.C. is a market that will be changing thanks to LNG Canada's $40 billion investment in Kitimat and the Coastal Link pipeline that will run from Dawson Creek to Kitimat. The area will see 33,000 construction jobs and 11,000 jobs from operations.
“There's a lot of buzz around that event, and the residential/rental market has already gone crazy. There will be a bit of development happening around it, but it's a challenge. What's changing is that the influx of camp sites is so significant,” Duff said.