In the second quarter of 2018, analysts at New Hampshire-based Lodging Econometrics (LE) reported that the total construction pipeline in Canada stood at 240 projects (29,780 rooms), up 28 projects — or 13 per cent — year-over-year. However, the pipeline will likely soon be topping out for this economic cycle, having risen within 10 per cent of the record level of 268 projects (33,838 rooms) last seen in 2007.
There are currently 82 projects (10,352 rooms) under construction — up 17 per cent by projects YOY — of which 13 projects (1,448 rooms) began construction in the first half of 2018. The number of projects scheduled to start construction in the next 12 months stands at 90 projects (10,363 rooms), a minimal one-per-cent decline in projects. Early planning has the most substantial shift in projects YOY, showing a 33-per-cent increase with 68 total projects (9,065 rooms) recorded. This increase in early planning is typical late-cycle activity, where developers are anxious to move from the drawing board into the permitting phase prior to any economic slowdown.
In the first half of 2018, Canada had 28 new-hotel openings — almost as many as the whole of 2017, which saw 31 hotels open. LE’s forecast for new-hotel openings predicts another 18 openings in the second half of 2018, while 2019 is forecast to see 55 projects (6,870 rooms) open. In 2020, we’ll see 62 projects (6,528 rooms) open — which is likely to be the highest level of new-hotel openings in this economic cycle.
Top hotel companies in Canada’s construction pipeline include Marriott International, leading with 48 projects (6,661 rooms), followed by Hilton Worldwide with 42 projects (5,077 rooms) and InterContinental Hotels Group (IHG) with 42 projects (4,233 rooms). These three companies make up 55 per cent of the total pipeline. The largest brands in the pipeline for each of these companies are Marriott’s TownePlace Suites with 10 projects (991 rooms), Hilton’s Hampton Inn & Suites by Hilton with 12 projects (1,405 rooms) and IHG’s Holiday Inn Express, with 27 projects (2,764 rooms), which is also the largest brand total in the pipeline.
Markets with the most projects in the total construction pipeline are Toronto with 40 projects (5,685 rooms), Calgary with 13 projects (2,120 rooms) and Edmonton with 13 projects (1,950 rooms).
The 2018 forecast for new-hotel openings has Ottawa leading with five projects (615 rooms) opening. In 2019 and 2020, Toronto is forecast to top the list with seven projects (806 rooms) and six projects (666 rooms) opening, respectfully.
Written by Lodging Econometrics