TORONTO — As any smart franchise developer knows, the success of a franchise concept is always contingent on having the right franchises, and arming those franchisees with the right tools can only help fuel success. To that end, Choice Hotels Canada recently hosted a Franchise Development seminar at Toronto’s Beer Academy to bring franchisees up to speed on industry trends and statistics.
The seminar kicked off with a panel of analysts setting the stage for how the hotel industry is poised to perform in 2014. According to Erin O’Brien from PKF, “The industry is still in a period of relatively slow growth demand,” with the year expected to close with an occupancy rate of 62 per cent. But occupancy is projected to grow to 63 per cent in 2014, while RevPAR is expected to grow by 4.1 per cent. In terms of how the country is expected to fare, Central Canada is poised to see RevPAR inch up by four per cent, with Western Canada following close behind at 3.5 per cent; Atlantic Canada is expecting growth of 1.9 per cent. According to O’Brian, amenity creep is having a moderate impact on the bottom line, as hotels compete with one another to introduce new products and services.
Robin McCluskie of Colliers International noted that 2012 was a peak year for trades in the hotel industry, but she believes 2013 will be the new peak with many big-box deals, such as the recent sale of the Fairmont Chateau Laurier. The year is expected to finish with $1.06-billion volume, representing a total of 93 trades. “Fifty per cent of the volume sold took place in Ontario,” said McCluskie, referencing sales such as the Comfort Inn Burlington and the Stage West in Mississauga.
“Central Ontario is turning the corner.” Industry demand continues to rebound with reduced new supply in the pipeline for year-over-year RevPAR growth, said Ian Ricci of GE Capital, noting that the average debt in the GE portfolio is $69,400. He told the audience of Choice franchisees that Choice Hotels represents nine per cent of GE’s on-book properties.
Capping the session, Brian Leon of Choice Hotels, told the audience “We’ve opened 75 new hotels in recent years, but we also let a lot go.” He added that “social media makes you know pretty quickly which properties are performing poorly.” Leon was quick to add that 19 of the 25 top hotels in the Choice Hotels Canada system are new to the system. He also informed the group that the Comfort brand is transitioning to a new prototype, which “can compete with anything in the market.” The new, smaller footprint features 56 to 62 rooms.
