Canadian Lodging Industry Overview - Hospitality & Gaming

A Cushman & Wakefield Valuation & Advisory Publication

2018 OUTLOOK Nationwide, the lodging sector reported year-over-year RevPAR growth from 2010 through 2017. Gains have been attributed to stronger national and global economic growth, driven by solid growth in business travel and improvements in leisure travel. The weakening of the Canadian dollar, a stronger U.S. economy, expanded domestic and international air capacity, and improved visa facilitation for international visitors – particularly emerging markets – stimulated gains in national lodging performance.

In 2015, slower economic growth and weakened business travel within Canada’s major oil markets hampered overall RevPAR growth. Despite continued declines in RevPAR within oil- producing provincial markets, Canada’s overall performance saw a rebound in 2016 and into 2017, reaching record levels through the first nine months of 2017. With oil prices projected to gradually increase, the outlook for Canada’s energy-focused provinces is more positive for the medium-term.

RevPAR ($) vs. Economic & Tourism Indicators

8%

A decline in oil prices and slower economic growth leads to a slower RevPAR growth in 2015.

YTD Sept: 7.4% YE Forecast: 6.0%-7.0%

Following the economic recession of 2008/2009, the Canadian lodging industry saw a strong resurgence between 2011 and 2014.

7%

YTD Sept: 7.4% YE Forecast: 6.0%-7.0% Record growth achieved by non-resource-based markets in 2016 through Q3 2017.

A decline in oil prices and slower economic growth leads to a slower RevPAR growth in 2015. 5.8%

ing the economic ion of 2008/2009, anadian lodging try saw a strong ence between 2011 014. 6%

Record growt by non-resour markets in 201 Q3 2017.

5.0%

5.8%

5%

5.0%

3.9%

4%

2018F: 3.0%-4.0

2018F: 3.0%-4.0%

3.9%

3.0%

3.0%

3%

2.7%

2.7%

2%

0.9%

Is Calgary turning the cor Demand is up but new su is still on the way.

Is Calgary turning the corner? Demand is up but new supply is still on the way.

1%

0%

1

2012

2013

2014

2015

2016

2017f

2018f 2 19f

2019f

2011

2012 2013 2014 2015 2016 2017f

2018f

2020f

Real GDP at market prices (2007 $ millions) -

Retail sales (2007 $ millions) -

Overnight Visits (000s)

Total expenditures (overnight visits, $ millions)

RevPAR ($) -

Source: STR, Oxford Economics, Statistics Canada, and Conference Board of Canada Republication or Other Re-Use of this Data Without the Express Written Permission of STR is Strictly Prohibited

Over the 2011–2017 period, RevPAR performance has shown a strong correlation with Real GDP, Retail Sales and Total Overnight Visitor Expenditures. Economic forecasts indicate a tempering in performance can be expected over the next few years. Based on an analysis of historical lodging market performance, key economic indicators, and in consideration of expected supply increases – balanced against anticipated demand growth – 2018 is expected see Canada’s RevPAR increase about 3%-4%.

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