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The Canadian hospitality industry was the first sector to feel the full impact of the pandemic, with border closures and lockdown orders causing occupancy to plunge from historic highs to less than 20%, virtually overnight.
The industry is still ailing as it waits for vaccines to begin working their magic. But during a brief window in the second half of last year, after COVID’s first wave had subsided and the second wave had yet to hit, pent-up demand translated into a resurgence in leisure travel.
Hotels in drive-to resort destinations, such as Banff, the Okanagan and Muskoka saw a strong increase in occupancy levels as locals sought refuge in the fresh air and mountain views, away from their home / home offices, over the summer and fall. It was all too brief, of course, as the second wave kept people at home heading into the holidays.
Nevertheless, to Mark Sparrow, the new leader of CBRE Hotels in Canada, that boost in business offered hope that a similar spike in leisure travel will occur once the vaccine has flowed through the bulk of the population. Corporate travel, however, could take some time before returning to previous levels.
In Prince Edward County, a two-hour drive east of Toronto, an influx of private capital is anticipating another surge in domestic travel this summer; investors are purchasing houses, cabins and small resorts to rent out in some cases for over $500-700 per night, and reporting strong booking pace through the summer.
“We saw a big uptick in local demand at the end of last year, and we anticipate a similar trend as soon as the current restrictions lift, with leisure business returning very quickly."
“We saw a big uptick in local demand at the end of last year, and we anticipate a similar trend as soon as the current restrictions lift, with leisure business returning very quickly,” says Sparrow. “Everyone has been sitting at home just waiting to get out, do something and get a change of scenery. And it doesn’t look like they’ll be travelling internationally anytime soon. So it’s going to be all about local support for the leisure travel industry in the near term.”
As the hospitality industry looks ahead to a recovery later in 2021, Sparrow and his team, which includes co-leader Luke Scheer and Vice President Ryan Tran, are spending extra time focusing on the needs of clients, offering innovative and straightforward solutions to see them through challenging times.
Sparrow and Scheer have built a formidable operating asset practice which is anchored in the hotel space. They are industry leaders with an extensive global network of clients and have executed some of the largest hotel transactions in the world involving Canadian assets. They are bringing this experience to bear as they help clients endure current hardships.
“There is no doubt, there are a lot of groups that are in a tough spot,” says Scheer. “There’s light at the end of the tunnel, but right now it can feel like a recovery is far off. We’ve had a glimpse of what it’s going to look like and can help our clients plan for the inevitable rebound.”
Amid the challenges, there are opportunities. For instance, some hotel owners in major markets who might not have considered selling one of their assets before might be more willing to consider a deal now than ever before. “There’s significant capital interested in opportunities to get into a high-barrier-to-entry market,” says Scheer.
“We’ve been pleasantly surprised by some of the deals we’re putting together,” Sparrow adds. “Groups are still stepping up at incredibly strong levels in the midst of the pandemic, and deals are beginning to percolate. For investors, now is the time to lean in, not step away.”