WASHINGTON — Canada’s hotel Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) were the highest for any year on record, according to CoStar’s 2023 data.
In 2023 (percentage change from 2022):
- Occupancy: 65.7 per cent (up 7.7 per cent)
- ADR: $200.08 (up 9.7 per cent)
- RevPAR: $131.48 (up 18.3 per cent)
Among the provinces and territories, Manitoba recorded the highest 2023 occupancy level (72.2 per cent), which was 10.8 per cent above 2022. Among the major markets, Vancouver saw the highest occupancy (78.5 per cent), up 7.8 per cent over 2022.
The lowest occupancy among provinces was reported in Saskatchewan (58 per cent), up 4.8 per cent against 2022. At the market level, the lowest occupancy was reported in Edmonton (56.6 per cent), up 9.4 per cent.
“Canada hotel room rate growth outpaced inflation in 2023, further cementing the hotel sector’s reputation as a strong hedge against the metric,” says Laura Baxter, CoStar Group’s director of Hospitality Analytics for Canada. “Due to weakness in the broader economy, consumers have started reining in discretionary spending. For 2024, occupancy is forecasted to contract 1.4 per cent in the first quarter and remain flat in Q2, with a return to positive territory in the latter half of the year. Driven by inflation, ADR is expected to grow throughout each quarter. Overall, the hotel sector should continue to outpace the wider economy but will not be entirely immune to weakening consumer and business demand. Fortunately, limited supply-side pressures should act as a cushion to support top-line hotel metrics as the broader economy faces challenges this year.”
Baxter continues, “Strong key metrics and a positive outlook have resulted in more investment capital earmarked for hotels as opposed to other property types that have not performed as well. And since the development pipeline is still constrained due to high development and financing costs, and replacement costs are high, investors are focused on acquisitions as the most straightforward entry point.”
