CBRE Forecast: Revenge Travel Will Fuel Hotels Recovery 

16 Jun 2021

But the absence of conference and business travel will keep occupancy levels below 40% in 2021 versus 65% pre-pandemic


CBRE Hotels’ newly released outlook anticipates a slight recovery in the hospitality sector, which will be driven by an uptick in drive-to domestic leisure travel in and around major centres such as Toronto (where RevPAR is projected to rise 27%), Vancouver (+17%) and Montreal (+33%).

Domestic travel plays a key part in driving hotel demand in Canada, representing nearly 80% of overall tourism revenue most years. With Canadians still unable or unwilling to travel abroad, increased domestic leisure activity could give the Canadian hotel industry a much-needed boost in the short term. However, the absence of large meeting, conference and business travel is likely to keep Canadian hotel occupancy in the 38% range nationwide, versus 65% in 2019.

At these occupancy levels CBRE is forecasting only slight growth in the average daily rate (ADR) for the year, to $131 versus $163 two years ago. “Once the confidence is there, the more rate yield we can expect to see,” says CBRE Hotels Director Nicole Nguyen. “When we get closer to the 60% occupancy mark nationally, we will begin to see prices begin to increase.”

Recovery Impacts

One challenge impacting the recovery of the Canadian hospitality industry could be Canadians themselves, as open borders may trigger a travel exodus. “People have been at home for a year and a half, they’ve done the road trips,” Nguyen says. “The moment they’re vaccinated and can move around freely there is a strong chance that they will reschedule the all-inclusive trip to somewhere sunny that they had to cancel, will hop on a plane for Europe or head across the border. We may have a hard time keeping them at home.”

Even if Canadians do choose to travel within the country, there could be challenges in getting them to where they want to go. For example, many airlines have cut back on primary routes and in some cases eliminated secondary routes in order to adapt their business to the impacts of COVID. It may prove difficult to ramp everything back up quickly. “The ability of the airlines to re-engage all of that capacity in a short timeframe is uncertain,” says Nguyen. “How quickly they’re able to respond may factor into the recovery. ”

There is increasing pressure from hotel operators to reopen the U.S. border, or at least provide some visibility on what it will take to make that happen. The lack of certainty around the border is proving to be a serious threat for the meetings, convention and event industry, which is unable to book or confirm business in Canadian cities with confidence. "Meeting, conference and event business provides a base for hotel operators to build from," says CBRE Tourism & Leisure Director Rebecca Godfrey. "But if this business is absent it presents a compression building issue, particularly in our urban core markets."

Investment momentum

On the investment front, significant capital is poised on the sidelines looking for opportunities in the hotel space. “We have seen pent-up demand first-hand in assets we have been marketing thus far in 2021,” says CBRE Executive Vice President Luke Scheer. “Investors are actively looking to seize opportunities as we move forward in the recovery”

As fundamentals begin to improve, so too will investor confidence in pursuing and executing transactions in the hotel space. “We are seeing increased interest in resort assets given the resilience these properties have shown,” Scheer adds. “We are also encouraged by the continued interest from foreign capital as U.S. and International investors continue to view Canada as a highly sought-after market to invest in the hotel space."

2021-2025 Canadian Hotels Outlook

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at

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