Canadian Hotel Industry Will Return to Pre-Pandemic Revenues in 2023
September 21, 2022 3 Minute Read
After a summer of resurgent travel characterized by overbooked flights, out-of-stock rental vehicles, and room rates nudged up by inflation, it should come as no surprise that the Canadian hotel industry recorded a considerable uptick in its revenues during the sunny season just past.
According to CBRE’s new hotels market update, June and July saw Revenue Per Available Room (RevPAR) – a key indicator of hotel performance – exceed 2019 levels. August is expected to follow suit. And CBRE anticipates national RevPAR to reach $97 by the end of 2022, just shy of the 2019 tally, when the national average RevPAR was $106.
This strong performance is largely attributable to significant leisure demand from domestic and US visitors amid loosening travel restrictions and the rebooting of festival and event scheduling.
But while leisure travelers helped boost Canadian hotel occupancies over the summer, international, corporate and group travel has been slower to return. Markets depending on business travel demand continue to face challenges.
“While topline performance is essentially back to 2019 levels, bottom-line recovery is still a few years away. That means hotel operators aren’t proclaiming victory just yet,” says CBRE Hotels Director David Ferguson.
“National RevPAR is expected to continue its growth back to pre-pandemic levels in 2023, two years ahead of last year’s forecast.”
“The coming year will bring continued economic growth, with the return of corporate and conference travel, though at modest growth rates compared to 2022.”
West vs East
Western Canada hotels are forecast to see RevPAR growth of 11% in that region for 2023, with modest gains in both occupancy and Average Daily Rate (ADR).
Healthy room rate and occupancy growth is forecast across the Prairies, a region that’s currently benefitting from the prosperity of the energy sector and the return of resort travel activity. New supply will remain limited in most Western Canada cities so that all gains will directly be the result of increased occupancy.
In Eastern Canada, Quebec is expected to lead the hotel recovery with RevPAR gains of 17% in 2023, driven by increased occupancy and rates. Montreal will be leading the pack thanks to the return of annual big-draw events like the Grand Prix and Osheaga festival.
Ontario’s growth is projected at a modest 9%, while the Atlantic Region is expecting a 5% occupancy-driven increase after having observed a particularly strong year in 2022.
Over half of Canada’s major cities are expecting RevPAR above $100 in 2023, led by Vancouver ($182), Montreal ($135) and Toronto ($129). Niagara Falls will see the greatest year-over-year RevPAR growth, at 19%, followed by Montreal (18%) and Saskatoon (16%).
“Operators continue to see demand surge and rates recover, whether it's an urban property, suburban property or a leisure destination,” says Ferguson. “We expect that momentum to continue into next year, albeit at a more muted pace. The hotels industry is not so much in recovery mode anymore as we look at growth in the next year.”
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