TORONTO — In their first official function as part of the same company, PKF and CBRE co-hosted this week’s annual Outlook Conference at Toronto’s One King West hotel and painted a picture of a healthy hotel market, despite blips in certain areas of the country.
The morning’s information session shared some of the highlights from the past year, touching on economic indicators and providing hoteliers and owners in the audience with a framework for future success.
Fran Hohol, director of PKF kicked off the morning with an overview of the past year. “What looked like bad news isn’t at all,” she said, referring to talk of a recession, which has dominated headlines for the past several weeks. “We’ve had rumblings about a mild recession, but it was so mild, no one noticed it,” she quipped, noting that the economic malaise has primarily impacted Western Canada. “If you take out the three [western] provinces, GDP is running at 2.5 per cent,” she said. And while the Canadian dollar is sitting at 75 cents, on “the brink of an 11-year low, Ontario and B.C. are both reaping the benefits of the lower loonie,” said Hohol.
While the drop in oil prices and weaker growth has slowed down expectations of business travel, Hohol believes “we will see recovery next year.” She also noted that an influx of marketing dollars through Destination Canada will help regain U.S. travel to Canada, although the new Electronic Travel Authorization, ETA, mandate, which comes into effect next year, adds “an additional hassle factor to overseas travel.”
Speaking as part of a panel, experts from the two companies touched on everything from investment volume to ADR and RevPAR. According to Bill Stone of CBRE, “Q4 will see a number of closings in Ontario and B.C.,” which should culminate in investment volume of close to $2.2 billion. “It’s big numbers for sure,” said Stone, adding “it’s 10-per-cent more active than the U.S. market.”
According to Stone, most of the transaction activity of the past year is coming from Central Canada, which represents 63 per cent of all activity, with the Greater Toronto Area (GTA) forming 53 per cent of activity. “The numbers are strong, it’s all about TO these days,” he adds. Private investors represent the highest portion of those numbers.
Brian Stanford, from PKF, touched on hotel metrics. “There have been shifts in Western Canada. RevPAR growth of five per cent was expected, but the reality is RevPAR dropped by eight per cent — a real shift in performance metrics.” The good news is that while shifts occurred in various parts of the country, “the industry saw ADR growth of four to six per cent in all markets.” Added David Larone, “We’re seeing some of the best numbers ever, with national growth of five per cent. We haven’t seen these kinds of numbers since the 1980s.”
With the price of real estate continuing to grow in strong markets like Vancouver and Toronto, occupancy levels not seen in years, and continuing strength in ADR, the experts predict a strong 2016, giving the hotel industry something to smile about.