A Post-March Break Look at Canadian Hotels
18 Apr 2022 3 Minute Read
Those returning from March Break holidays could be convinced that the hotels industry has come roaring back to life after two years of pandemic shutdowns.
That reality might still be ahead of us. While the Canadian hotels industry has witnessed a marked improvement in its prospects as punishing lockdown measures lift, there is still a way to go before business returns to pre-pandemic levels.
CBRE’s new Canadian Hotel Industry Outlook projects that nationwide Revenue Per Available Room (RevPAR)—the key measure of hotel performance—is expected to grow by 43% nationwide to reach $81 in 2022. Though this represents a big improvement over 2021’s RevPAR of $57, it is still just 76% of 2019 levels. In fact, a full recovery to 2019 RevPAR levels won’t occur until 2024.
RevPAR is forecasted to improve over the balance of 2022 as confidence increases. Through the second half of the year monthly RevPAR performance should be in the range of 80% to 90% of 2019 levels.
Leisure travel has been an important part of the recovery to this point, notes CBRE Hotels Director Nicole Nguyen. “But going forward it will be critical that business and government travel levels ramp up to drive performance in off-peak periods.”
B.C. leads recovery
Some markets are rebounding more quickly, such as resorts and hotels in smaller cities. “Unfortunately, the major city centres and corresponding airport markets have really struggled,” Nguyen says.
Major urban downtown hotels have the biggest gap to close. In addition to being international tourism destinations, they are heavily reliant on corporate and meeting/conference demand, which has been "almost non-existent" in the past two years, says Nguyen.
CBRE expects the recovery in 2022 to be led by British Columbia, Quebec and Ontario, which are projected to see RevPAR levels of $103, $94 and $82 respectively. In each of these three provinces supply growth will be moderate, allowing strong demand conditions to drive occupancy improvements.
More importantly these provinces will see Average Daily Rate growth ranging from 8% to 13%, accelerating RevPAR recovery.
As far as the cities go, Greater Montreal is expected to lead Canadian hotels markets in 2022, with RevPAR growth of 88%, to reach $94. Greater Quebec City is close behind with a $93 RevPAR, growth of 70%.
In Atlantic Canada, St. John’s and Greater Halifax are also expected to see strong RevPAR growth, with 60% for both cities. Greater Toronto’s RevPAR is expected to grow 50% to $85 as the downtown core recovers and suburban markets build on 2021 performance.
In Western Canada, an especially popular destination, Greater Vancouver is expected to see the strongest RevPAR, growing 48% to $117 —the highest in Canada by a considerable margin.
Calgary and Edmonton are projected to grow RevPAR more than 50%, but lingering supply impacts and fundamental economic challenges remain. Nevertheless, CBRE expects Edmonton to reach $53 and Calgary to reach $62 in RevPAR for 2022.
“The good news is that we anticipate hotels across Canada to be well on their way back to full strength by the end of this year,” says Nguyen. “In fact, depending on how substantially consumer confidence rebounds, and to what degree business travel picks back up, there’s even the possibility that the hotel industry exceeds expectations.”
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