Since the turn of the millennium, the national accommodation industry has shown resilience and perseverance. The terrorist attacks in 2001, SARS epidemic in 2003 and most recently, the global economic recession in 2008 are a few of the significant tests the industry has encountered. Moving forward, the hospitality sector faces great challenges, but through these obstacles, it has gained strategies and tactics to survive and thrive.
In 2010, events such as the G20 and G8 Summits and the Winter Olympic Games helped push major markets through a difficult time following the economic downturn. In the shadow of these monumental events, 2011 continued a growth trend, albeit at a cautious pace. Nationally, accommodation demand expanded by three per cent combined with a 1.3-per-cent increase in supply, with occupancy rising by one percentage point to 61 per cent. The overall national ADR decreased by one per cent to $127 in 2011, while RevPAR increased by $1 to close at $78.
In 2012, demand growth is projected for a third straight year at two per cent against nominal supply growth of one per cent. By year’s end, the national occupancy level is forecast to improve by one percentage point to reach 62 per cent, coupled with a $2 increase in ADR to $129, resulting in a $2 climb in RevPAR to $80.
NATIONAL
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 63% 58% 60% 61% 62%
ADR $131 $125 $128 $127 $129
RevPAR $83 $73 $77 $78 $80
Source: PKF Consulting Inc.
Canada’s 10 major markets represent an estimated 45 per cent of the total national rooms supply. In 2011, Ottawa saw the most significant improvement with 6.6 per cent RevPAR growth, followed by Calgary at 6.2 per cent, Montreal at 5.2 per cent, Quebec City at 4.4 per cent and Winnipeg at 4.1 per cent.
After a successful 2010, Vancouver fell 7.9 per cent in RevPAR growth. Niagara Falls also experienced a slight decline of 2.5 per cent in RevPAR during 2011, while Edmonton, Toronto and Halifax saw improvements of less than one per cent in RevPAR.
Overall, the 10 major markets incurred a $1 drop in ADR to $132 in 2011 with occupancy improving by one percentage point to 65 per cent, resulting in a $1 improvement in RevPAR to $86. Canada’s major urban markets are projected to remain on a growth trend in 2012. Demand growth is forecast at two per cent with ADR growth of one per cent, resulting in a two-per-cent improvement in RevPAR to reach $88 in 2012.
10 MAJOR MARKETS
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 67% 62% 64% 65% 66%
ADR $138 $129 $133 $132 $134
RevPAR $92 $79 $85 $86 $88
Source: PKF Consulting Inc.
With a modest supply growth of less than one per cent in the balance of Canadian markets and a 2.5-per-cent increase in demand, occupancy levels are expected to reach 59 per cent in 2012. ADR is projected to improve to $124, resulting in a $2 increase in RevPAR.
OTHER MARKETS
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 61% 56% 57% 58% 59%
ADR $125 $121 $123 $122 $124
RevPAR $76 $68 $70 $71 $73
Source: PKF Consulting Inc.
In 2011, full-service properties experienced a one percentage point increase in occupancy to reach 64 per cent, while supply increased by 1.8 per cent, demonstrating continued positive economic recovery for the sector. At the same time, ADR softened slightly to $133 and RevPAR moved up to $85 for 2011.
With more than 1,000 rooms entering the full-service hotel sector in 2012, many of which will be at the luxury end, this segment is expected to drive ADR growth by one per cent to $135. Occupancy levels are projected to remain flat at 64 per cent, resulting in a RevPAR growth of one per cent in 2012. Despite a forecasted RevPAR of $86 in 2012, the sector will still remain below achievements reached in 2007 and 2008.
FULL-SERVICE HOTELS
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 66% 61% 63% 64% 64%
ADR $137 $130 $134 $133 $135
RevPAR $90 $79 $84 $85 $86
Source: PKF Consulting Inc.
Supply growth in the limited-service segment increased by less than one per cent in 2011, while demand improved by three per cent, contributing to a one-point upward shift in occupancy to 57 per cent. ADR remained flat at $101, resulting in a RevPAR of $58. For 2012, the limited-service segment shows indications of improvement in all three key performance metrics: ADR, occupancy and RevPAR. ADR is forecast to improve to $104 while occupancy is on pace to reach 59 per cent and RevPAR is expected to finish the year at $61. Limited-service hotel performance should continue to improve due to modest supply growth and the continued trend in cautious corporate travel budgets.
LIMITED-SERVICE HOTELS
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F))
Occupancy 59% 54% 56% 57% 59%
ADR $101 $100 $101 $101 $104
RevPAR $59 $54 $56 $58 $61
Source: PKF Consulting Inc.
Major Market Outlook
Our individual markets projections reflect the slow and steady recovery expected throughout the industry as well as supply and demand factors impacting each market.
Vancouver • Vancouver experienced a moderate decline in room demand in 2011 compared to 2010, when the Winter Olympics and Paralympic Games were held. Strong demand growth in many suburban markets, notably the Richmond/Vancouver Airport area and in Surrey/Langley, in addition to moderate growth in downtown Vancouver are projected to result in overall 2012 demand growth of 2.5 per cent, along with city-wide supply growth of 1.3 per cent. Overall, occupancy for 2012 is projected at 68 per cent. The strong performance of the global mining industry has had a positive impact on Vancouver, which is home to the head offices or branch offices of many firms.
Despite the demand growth, many operators in Vancouver are having difficulty boosting room rates as they continue to fight to gain or retain market share. Delegate volumes for the Vancouver Convention Centre for 2012, including international attendees, will be lower than 2011 levels. The continuation of economic problems in many countries has hampered efforts to boost international tourism visits. Many corporate demand sources are also exhibiting resistance to room-rate increases. Vancouver’s ADR is projected to be unchanged for 2012, at $137. This will result in a forecasted RevPAR of $93 for 2012, a one- per-cent improvement over 2011 levels.
VANCOUVER
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 71% 65% 68% 67% 68%
ADR $141 $132 $147 $137 $137
RevPAR $100 $85 $100 $92 $93
Source: PKF Consulting Inc.
Calgary • The combination of the economic downturn, lower oil and natural gas prices and new supply growth outpacing demand growth, resulted in lower market occupancies in 2009 and 2010. Demand levels improved significantly in 2011 bolstered by a resurgence in oil and oil sands-related activity, which had the Calgary economy ramping up, as measured by such factors as new office and industrial construction. Low natural gas prices tempered the enthusiasm somewhat in 2011, and this has continued in 2012. Regardless, demand levels have improved significantly year to date in 2012 due to oil related activity and other factors such as the Calgary Stampede’s Centennial event. Overall, year-end demand growth of four per cent is projected, resulting in year-end occupancy of 70 per cent. The 304-room 5 Hotel & Suites closed in February 2012 and the closure of this sizeable property has largely offset new supply entering the Calgary market. When combined with the projected demand growth, overall occupancy growth of three percentage points is projected for 2012.
The increase in accommodation demand has enabled many operators to become more aggressive with room rates, resulting in a projected $5 increase for 2012. Overall the projections for 2012 year-end occupancy and ADR are similar to the 2008 results, although RevPAR at $105 remains $4 below the 2008 result.
CALGARY
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 72% 65% 64% 67% 70%
ADR $151 $144 $143 $146 $151
RevPAR $109 $94 $92 $97 $105
Source: PKF Consulting Inc.
Edmonton • Although the occupancy rate for Edmonton continues to be in the low 60-per-cent range, since the 2008 economic crisis, demand for occupied room nights has been on the rise since 2010. Supply growth has also been a factor in keeping the occupancy rate in the low 60-per-cent range. In 2011, the Edmonton market experienced almost equal growth in supply and demand of approximately five per cent, which kept the occupancy rate at 62 per cent. Similar demand growth of five per cent is projected in 2012, and, this year, demand is projected to outpace supply growth. As a result, the Edmonton occupancy rate is projected to reach 64 per cent in 2012.
Year-to-date figures show impressive results, specifically in West Edmonton and South Edmonton. As the service centre for Northern Alberta, the Edmonton accommodation industry continues to reflect its relationship with the oil and gas industry. In 2012, growth in ADR is projected to increase to $121 from $119 in 2011, an increase of $2, or approximately two per cent.
EDMONTON
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 73% 65% 62% 62% 64%
ADR $123 $120 $120 $119 $121
RevPAR $90 $78 $74 $74 $78
Source: PKF Consulting Inc.
Winnipeg • The overall Winnipeg accommodation sector has recovered from the economic downturn in 2009, with two successive years of positive growth in both 2010 and 2011. Modest demand growth, coupled with negative supply growth in 2010, resulted in an overall market occupancy of 68 per cent. In 2011, many Manitoba residents were impacted by major floods and forced to evacuate their homes. These flood victims were housed in various hotels in Winnipeg for weeks and even months in some cases. Additionally, three new properties opened in Winnipeg in 2011. Demand for occupied room nights grew by six per cent in 2011, while supply grew by 3.1 per cent, resulting in an occupancy rate of 70 per cent in 2011.
Based on year-to-date results for 2012, with the removal of one-time flood demand that occurred in 2011, and the impact of 3.5-per-cent supply growth, the Winnipeg occupancy rate is forecast to be 68 per cent in 2012. The ADR is projected to increase by two per cent in 2012, to $120 over $118 in 2011.
WINNIPEG
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 69% 64% 68% 70% 68%
ADR $111 $112 $116 $118 $120
RevPAR $77 $72 $79 $82 $81
Source: PKF Consulting Inc.
Toronto • In the shadow of the G20 Summit in 2010, Toronto’s accommodation sector maintained its performance levels in 2011 and is poised to make strides in 2012. In 2011, supply increased 2.5 per cent, matched by similar demand levels, resulting in a flat occupancy rate of 66 per cent. At the same time, Toronto underwent a $1 increase in ADR and an overall $1 increase in RevPAR. Demand levels in 2012 are forecast to improve by 1.5 per cent against a further 1.8-per-cent increase in supply. Growth in Toronto’s luxury-room product should help drive rate with ADR forecasted to reach $130 in 2012. Leisure demand is expected to continue with a strong base of cultural and sporting events, including the Toronto International Film Festival, the Roger’s Cup and the 100th Grey Cup. Additionally, 2012 has been a great year for group and convention business. Volleyball Canada brought in 23,000 attendees in March and Microsoft filled the city with 70,000 room nights in early July. Overall, occupancy is expected to remain flat at 66 per cent and RevPAR is projected to improve by one per cent to $86 by year-end.
TORONTO
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 66% 61% 66% 66% 66%
ADR $136 $124 $127 $128 $130
RevPAR $90 $75 $84 $85 $86
Source: PKF Consulting Inc.
Niagara falls • The Niagara Falls market saw no increase in supply in 2011 while demand fell one per cent causing occupancy to erode by one point to 55 per cent. Average Daily Rates in the market have eroded by two per cent in 2011 to $128, leading to a decline in RevPAR of 2.5 per cent to $71.
In Niagara Falls there has been a shift to a Total Revenue approach to selling hotel rooms, especially among the full-service hotels. The majority of these properties are using value-added packaging (specifically, flash deals) to attract room nights to their property. The other revenue from these packages is allocated to the respective departments, reducing the reported ADR. As such, these packages have had a negative impact on the overall market ADR. We expect to see this trend continue into 2012, driving demand while limiting rate growth.
Niagara Falls is projected to realize a five-per-cent increase in demand in 2011, while ADR will remain unchanged at $128. With one-per-cent supply growth expected in 2012, occupancy is projected to increase three percentage points to 58 per cent, resulting in RevPAR growth of four per cent to $74.
NIAGARA FALLS
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 56% 55% 56% 55% 58%
ADR $139 $132 $131 $128 $128
RevPAR $77 $72 $73 $71 $74
Source: PKF Consulting Inc.
Ottawa • Ottawa’s hotel sector continues to thrive with the stability provided by the presence of the federal government and a well-balanced economy. The re-opening of the expanded Ottawa Convention Centre, together with self-contained meetings and conventions, has been a demand driver for the city. Supply growth increased by one per cent in 2011 and is scheduled to increase by a further three per cent in 2012. In 2011, 5.5-per-cent demand growth fuelled a three percentage point increase in occupancy and a two-per-cent surge in ADR contributing to a RevPAR of $96.
The balance of 2012 does not show any signs of slowing down. Leisure demand has shown improvements in the city and strong growth has moved demand to the sub-markets. ADR in 2012 is projected to finish at $142 with occupancy remaining steady at 71 per cent. RevPAR is forecast to exceed $100 for the first time in the city’s history with a projection of $101 for 2012.
OTTAWA
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 70% 66% 68% 71% 71%
ADR $136 $133 $133 $136 $142
RevPAR $96 $87 $90 $96 $101
Source: PKF Consulting Inc.
Montreal • With declining supply in 2011, due to the conversion of several hotels to rental apartments and student residences, offset by positive demand growth of three per cent, Montreal saw occupancy succeed to 66 per cent and ADR improve by 1.4 per cent. These factors contributed to a RevPAR of $91, which is reflective of 2008 levels prior to the downturn in the economy.
Year to date, Montreal is struggling to build upon 2011 results, as media coverage of the student protests has discouraged potential travellers from visiting the city. ADR is expected to decline by $1 to $136 and RevPAR is projected to weaken to $89. While the 2012 year-to-date declines largely impacted the downtown core, there has been a shift in demand to other areas of Montreal, which will benefit the airport, Laval and surrounding markets.
MONTREAL
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 64% 59% 64% 66% 66%
ADR $138 $130 $135 $137 $136
RevPAR $88 $77 $86 $91 $89
Source: PKF Consulting Inc.
Quebec City • Quebec City is inching back from 2008 success, when the city hosted its 400th Anniversary Celebrations. A strong convention year in 2010 resulted in a five-per-cent improvement in demand over 2009, while 2011 saw a four-per-cent increase in ADR levels, and demand growth of one per cent, resulting in a four-per-cent improvement in RevPAR growth.
In 2012, Quebec City continues its growth trend with another strong convention base and summer events, including the “Laugh-It-Up Festival” in June and the Grand Prix Cycliste de Québec in September. In addition, the provincial election is expected to increase demand in Quebec’s capital city. Overall, supply is expected to remain at current levels, with both demand and ADR improving by 1.5 per cent to reach 62 per cent with an ADR of $145 and a RevPAR of $90.
QUEBEC CITY
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 67% 56% 60% 61% 62%
ADR $158 $138 $137 $143 $145
RevPAR $105 $78 $82 $87 $90
Source: PKF Consulting Inc.
Halifax/Dartmouth • In 2011, accommodation demand in Halifax/Dartmouth declined by one per cent while supply remained constant, causing occupancy to fall to 63 per cent. The ADR in the market grew by one per cent, bringing the rate up to $125 and RevPAR to $79.
The Greater Halifax Area is seeing positive growth in all sectors with strong business interest in development. The city expects to see continued increased levels of business in the coming years as the infrastructure for the $25-billion shipbuilding contract is put in place. Year to date 2012, hotel operators have reported an increase in visitors travelling by car — particularly from Quebec and Atlantic Canada provinces, although travel from the United States has not yet returned to pre-recession levels.
Average Daily Rates in the Halifax market are expected to improve by one per cent in 2012 to $126. The market is projected to see demand decline by 3.5 per cent while supply will decline by five per cent, thereby increasing occupancy to 64 per cent. RevPAR is projected to grow by three per cent to $81 in 2012.
HALIFAX/DARTMOUTH
2008 2009 2010 2011 2012
Actual Actual Actual Actual PKF (F)
Occupancy 67% 63% 64% 63% 64%
ADR $129 $124 $124 $125 $126
RevPAR $86 $78 $79 $79 $81
Source: PKF Consulting Inc.
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