Not all destinations are created equal. That’s one takeaway from the CBRE Hotels 2022 Canadian Accommodation Sector Market Outlook, which shows that with many international travel restrictions still in place but a re-opening progressing in most provinces, travelers who stayed within Canadian borders this year flocked to the nation’s most well-recognized, eye-catching locales, namely Vancouver, Niagara Falls and Quebec City.
An increased level of domestic travel in 2021, which is expected to be up almost 19% over 2020 according to the Conference Board of Canada, helped to buoy these markets in the face of unprecedented hotel sector challenges — lockdowns, variants, labour shortages and border closures to name but a few — and brighten the outlook for hotels, resorts, restaurants, and the overall tourism industry in those popular locations.
For its part, B.C. saw more domestic leisure travel traffic in the past year than it did pre-pandemic, with over 14 million overnight visits from Canadian travelers in 2021 versus 13.5 million in 2019.
CBRE is forecasting Vancouver to outperform the other Canadian markets by most measures in the coming year, with 2022 occupancy projected to hit 55%, average daily rate (ADR) to rise to $176, and Revenue Per Available Room (RevPAR) to increase to $97, up from $47 in 2020 but still well shy of $175 in 2019.
Niagara Falls is projected to have occupancy in 2022 that is slightly better than Vancouver’s, at 59%—the highest of any market in Canada and down just 8 points from its 2019 level.
CBRE forecasts that in 2022 Quebec City — with assistance from an anticipated increase in meeting and conference travel in the second half of next year — will see occupancy of 55%, ADR of $169 and RevPAR of $92, second only to Vancouver and outperforming its provincial rival Montreal.
“Resort destination location properties have seen the strongest RevPAR bounce back in 2021, similar to what we saw in 2020,” says CBRE Hotels Director Nicole Nguyen. “While RevPAR is still below their 2019 levels these markets are making great strides towards recovery.”
Urban Hotels Struggle
By contrast, urban downtown hotels saw a sharp falloff in RevPAR as COVID set in, and they have been dwelling at the bottom of the performance chart ever since. “There has been some improvement in our downtown cores lately,” says Nguyen, “but it’s still a long way from the typical RevPAR positioning for these hotels.”
CBRE is projecting that all 13 of Canada’s major hotel markets will have RevPAR under $100 in 2022, with Vancouver at $97, Toronto at $78, and Montreal at $79. “The last time we had all the major markets under $100 was in 2010, in the midst of the Global Financial Crisis,” notes CBRE Hotels Director David Ferguson.
CBRE forecasts that in 2022 RevPAR will increase by 53% to $72 but that recovery to 2019 levels likely won’t occur until 2025.
Domestic leisure travelers have been the biggest source of demand for Canada’s struggling tourism industry over the past two years, but a more complete recovery in the industry will depend on the return of U.S. travelers and a resurgence of business travel, meetings and conferences, which is projected to begin ramping up in the spring next year.
Until then, expect B.C. and Quebec to outperform.