Investment in Canadian Hotel Market predicted to grow, backed by solid Q1 performance

Vancouver leads the way with 16.1% increase in Q1 RevPAR

Toronto – May 24, 2016 – Canada’s Hotel market continues to fire on all cylinders and build on 2015’s record year of investment volume which surpassed $2.3 billion.  According to CBRE Limited’s (‘CBRE’) Canadian Hotels Outlook 2016 report, annual transaction volumes of approx. $2.5 billion is now the ‘new normal’ for the Canadian Hotel market and strong operational performance is underpinning investor appetite for the asset class.   “Investors from across the globe are looking at Canada’s hotel industry and Bluesky’s recent announcement of its multi-billion dollar Definitive Agreement with InnVest REIT is a clear barometer of this appetite” commented Bill Stone, Executive Vice President of CBRE Hotels Capital Markets Group in Canada.

Overall, Canada saw a modest 0.3% uptick in revenue per available room (RevPAR) to $91 in Q1 2016.  However drilling down reveals great regional disparities with Central Canada leading the three regions with a 6.1% increase in RevPAR. Atlantic Canada posted a stable 1.2% gain but B.C’s strong performance could not offset large declines in Alberta leading to a 5.4% decline overall for Western Canada.

The pain being experienced in the oil patch led to a 26.1% decrease in Q1 RevPAR in Calgary as energy sector cutbacks and new supply continue to weigh heavy on performance.  However, Toronto and Vancouver delivered superb operational results, posting Q1 gains in RevPAR of 9.1% and 16.1% respectively with Montreal seeing a robust increase of 3.9%.

“The fundamentals of the Canadian hotel market are extremely strong and, outside of the oil patch, we’re seeing a continuing of the momentum generated in 2015.  Q1 RevPAR growth in Toronto and Vancouver has far exceeded our expectations.  When you combine this with a low-interest rate and low-loonie environment, then throw in Canada’s reputation as a safe haven for capital preservation, it all adds up to an extremely compelling investment climate for foreign capital,” 

The strong performance of Q1 is predicted to continue throughout the remainder of the year, with the low Canadian dollar benefitting a number of markets.  Fuelled by the stellar growth of Toronto, CBRE forecasts an 11% growth in hotel profits in Central Canada for 2016.  Strong profit growth is also forecast for Atlantic Canada and B.C. at 8% and 13% respectively, but the struggles in Alberta are expected to endure throughout 2016 leading to an estimated 27% decline in profits. 

“Not only does a low dollar attract U.S. visitors North and encourage Canadians to vacation domestically, favorable exchange rates are anticipated to drive film and television production in Toronto and Vancouver, directly benefitting our hospitality industries,” commented David Larone, Senior Managing Director ​of CBRE Hotels Valuations and Advisory Group in Canada.

“Calgary and Edmonton’s hotel markets will continue to struggle due to less corporate travel requirements and an unfortunately timed increase in hotel supply, which is set to delivery over 2,200 new rooms across the province.  That being said, Alberta’s resort market, which stretches from Waterton to Jasper, is a bright spot in its accommodation sector with strong gains in RevPAR performance. Domestic and international travel volumes are up and we expect this to continue throughout 2016.”

For further details and insights, download CBRE’s latest Canadian Hotels Outlook 2016 report and the accompanying Q1 2016 Hotels Update for Q1 operational performance results. 

​​​​​​​​​​​​​​​​​​​​​

About CBRE

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and​ occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

In Canada, CBRE Limited employs approximately 1,890 people in 20 locations from coast to coast. Please visit our website at www.cbre.ca​.​


​​​​​​​​​​