Canadian Lodging Industry Overview - Hospitality & Gaming

While indicators remain favourable, new supply will become a larger issue in some markets. To-date, new room supply has been constrained in most markets, particularly in high barrier-to-entry locations such as city centres. Although many downtown markets are performing at peak levels, and with demand being displaced into surrounding markets, new room supply will become more of a consideration in key suburban and secondary markets as we move through 2018. Within a diverse national market such as Canada, there are areas which underperform. Alberta and Saskatchewan continue to languish; however, these markets are seeing some positive signs despite the slow recovery of the energy sector. The larger issue in markets such as Regina, Saskatoon, Edmonton, and Calgary is the amount of new room supply which continues to be delivered and adds to the issue of stagnant demand growth. The investment sector has been active in 2017 with a number of notable transactions, including the largest single asset and the highest value per room transactions in Canadian history. Sellers disposing of non-core assets are

The investment sector has been active in 2017 ... including the largest single asset and the highest value per room transactions.

achieving strong pricing as active buyer pools look for opportunities to acquire and reposition properties. Strong operating performance and the abundance of capital has pushed hotel pricing to all-time highs; however, hotels still provide comparatively high returns compared to many other asset classes.

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