By Nicole Nguyen, Senior Vice-President, CBRE Hotels
For the first time since 2019, the hotel industry in Canada in 2023 is operating at full capacity without the restrictions, limitations and disruptions that defined the pandemic years. This is forecast to result in RevPAR growth of 17 per cent this year, which is being led by the major markets. Although this growth pales in comparison to the 2021 and 2022 RevPAR gains of 45 per cent and 95 per cent respectively, in the context of longer-term year-over-year RevPAR growth, this improvement will be almost double any other single year of growth since the inception of the CBRE Trends database in 1998.
Looking back at 2022, even with the soft first quarter due to the Omicron wave, the market realized incredible gains in all top-line metrics, with occupancy improving 20 points to 61 per cent, while ADR grew almost 33 per cent to $179. Taken together, these improvements resulted in a RevPAR growth of 95 per cent, or $53, to $109. This brought RevPAR to 103 per cent of 2019 levels. Interestingly, while the national RevPAR recovered beyond 2019 levels, occupancy finished five to six points below prior peak, with the industry short about five million occupied room nights. The recovery of RevPAR in 2022 was driven by the strength of the performance in the secondary and tertiary markets across the country.
Just as the pandemic caused a demand shock unlike anything the industry had previously experienced, the ADR-led nature of the recovery that the industry has experienced to this point is also unique. Previously, the recovery following a demand shock such as 9/11, SARS or the Great Financial Crisis was led by a relatively rapid return of demand levels (typically one to two years) with ADR recovery taking several more years (typically three to four) with total RevPAR rebound taking between four and six years. Based on the 2022 results and the current forecast, ADR and RevPAR recovery took 2.5 years and three years respectively, while occupancy is on track for a four-year recovery timeline.
Supply Growth: Lower for Longer?
As noted, the forecast for 2023 will see national occupancy improve to 66 per cent, a peak for the industry and generally accepted to be functional capacity given the seasonality of the markets and traditional travel patterns of the various demand sources. However, in the short-term there is the potential that national occupancy could exceed these levels given the modest supply growth anticipated. Between 1998 and 2018, annual supply growth nationally averaged 1.5 per cent. Unlike previous downturns, where it took several years for the supply curve to adjust to the change in demand levels, during the pandemic, supply reacted immediately. This, of course, was because in many areas of the country, construction sites were shut down at various points, there were significant supply-chain issues and the uncertainty caused lenders and developers to pause or reconsider going ahead with new projects.
As a result, there were very few projects which commenced construction in the latter half of 2020, 2021 or even the first half of 2022, this, coupled with several closures and conversions to alternate use has resulted in supply growth which has been in the range of 0.6 per cent per year. While there is a robust pipeline of new projects which are proposed or in the planning stages, it is likely going to be a few more years before supply growth catches up with the demand curve and the market supply/demand conditions re-balance and moderate occupancy.
Demand Has Recovered, But Has It?
While supply is certainly playing a role in the forecast occupancy, the strength seen on the demand side is contributing as well. According to Conference Board of Canada, although domestic overnight visits (which accounts for almost 80 per cent of Canada’s total overnight visitation) are forecast to surpass 2019 levels this year, the visits are still skewed more towards pleasure visits, which will be 110 per cent of 2019 levels with business overnight visits at only 88 per cent of 2019 levels. The strength of domestic visits is helping to mitigate the lower U.S. and overseas visits, which are at 92 per cent and 86 per cent of 2019 levels respectively.
While the hotel industry is forecast to capture more than 113.6 million occupied room nights in 2023, a higher proportion than normal is coming from leisure demand. It would appear that some of the pent-up leisure-travel demand, which played a significant role in 2022, continues to be a factor in 2023 and for the time being is enough to offset the softness on the business-travel side. Going forward, the question is how long business travel may take to recover to 2019 levels, which based on the Conference Board forecasts could be 2026 or 2027, and how to fill any gaps that may be created as Leisure demand normalizes.
ADR Growth Decelerating
As noted, national ADR increased by almost $44 or 33 per cent in 2022 growing to $179. The improvement of ADR was a major contributor to the industry being able to recover to 2019 RevPAR levels in 2022. Operators have been able to drive significant ADR growth for several reasons, including the general economic inflationary conditions, a higher level of leisure demand due to pent up travel desire and excess discretionary income. Since early 2021 the 12-month rolling average of ADR growth has been in the 30 per cent to 40 per cent range, but in the last few months, the pace of this growth has slowed. For July, the growth was about 16 per cent. While this growth is still very strong it suggests that some of the yield pressure, particularly during peak periods, is starting to soften. The recent travel-intentions survey pointed out that Canadians, specifically middle-income earners, are planning to scale back on travel as cost pressures related to the cost of living is cutting into their discretionary income.
The New Normal: Same But Different
As noted in 2023, all of the top-line performance metrics are forecast to recover to, or exceed, prior peak levels and the industry will be considered fully recovered from the impacts of the COVID pandemic. However, not everything has returned to the way it was. At present, the occupancy recovery continues to rely heavily on higher-than-normal levels of leisure demand, which has also made a significant contribution to rate yield. Business travel forecasts do not expect for this source of demand to return to 2019 levels until 2026 or 2027, which may present a challenge if leisure-demand levels and travel patterns return to more historic levels.
Additionally, increasing pressure on discretionary spending, both for households and businesses, is likely to slow the pace of ADR growth. Overall, the second half of 2023 is expected to generally be on par with the same period last year, which will mean that the gains realized in the first half will be the driving force behind the 17 per cent RevPAR growth forecast for 2023.
CBRE HOTELS 2023 MARKET FORECAST
By CBRE Hotels and CBRE Tourism Consulting
At the end of last year, the expectation was that 2023 would bring increasingly diverse segmentation and the return of more contracted rate demand was going to push national occupancy back to peak levels with more temperate ADR growth and RevPAR improving 11 per cent. Based on the current forecast, national RevPAR performance will exceed these expectations on the basis of stronger ADR growth.
For many people, the resiliency of ADR and the continued yield pressure has been a pleasant surprise as almost every market is expected to see high single digit or low double-digit rate growth. These conditions have created an “upside-down” recovery where ADR has recovered more quickly than occupancy. By the end of 2023, the forecast projects RevPAR to be at 120 per cent of 2019 levels. It is against this backdrop that CBRE has prepared its 2023 Market Forecast.
Major Metro Market Outlooks
Canada’s major markets account for more than 42 per cent of all rooms across the country and have a significant influence on the national performance for the industry year to year. In every one of Canada’s major metro markets, the forecast projects double-digit RevPAR growth in 2023 with relatively little new supply, strong demand growth and continued rate yield.
Vancouver
After relying primarily on domestic and U.S. visitation in 2022, international visitation is expected to pick up pace in 2023. Despite challenges this year at Canadian airports, including in Vancouver, passenger statistics at YVR in 2023 are pacing well ahead of last year. Similarly, the number of cruiseship passengers and number of vessels in 2023 is pacing ahead according to year-to-date statistics. In fact, the cruiseship sector is expecting a potential 1.3 million passengers this year, which is well ahead of 2019 figures.
Strong guestroom demand and market occupancy is expected across all metro Vancouver markets in 2023. While downtown Vancouver hotels contribute significantly to the region’s performance, the suburban markets are also experiencing their fair share of demand growth. However, room supply is also a contributing factor to the region’s occupancy performance.
There has been no substantial increase in rooms since 2010 and, in fact, available rooms are currently below historic levels due to the permanent closure of several properties, particularly for the purpose of conversion to alternative use.
Room supply is expected to increase only moderately in 2023, at approximately one per cent. On the other hand, room demand is projected to increase by 9.5 per cent for the year, pushing occupancy to 80 per cent for the Metro Vancouver region, which is in line with 2019 levels. Coming off of 42-per-cent rate growth in 2022, the market is projected to see another 14-per-cent growth in 2023 driven by strong first quarter ADR yield and high demand levels. This growth is expected to push rate up by $32 to $270. RevPAR for Metro Vancouver is projected to improve almost 24 per cent, which will put it at $41 ahead of 2019 pre-pandemic RevPAR performance.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 80% | 32% | 48% | 74% | 80% |
| ADR | $219 | $147 | $167 | $237 | $270 |
| RevPAR | $175 | $47 | $80 | $175 | $216 |
Calgary
GDP growth for Alberta and for the city of Calgary was strong in 2022. While the pace of growth is expected to be slower in 2023, economic growth is still expected to be positive due to high agriculture and energy prices and a population boom. The growth in population helps the labour force, which in turn improves consumer confidence and spending despite the recent wildfires, inflation and interest-rate pressures. All in all, the economic growth is positive for the accommodation sector as it keeps demand strong.
Despite an office vacancy rate that remains above 30 per cent in downtown Calgary, the market experienced its fourth-consecutive quarter of positive net absorption as of Q2 2023. Calgary has generally seen a higher rate of employees working from the office consistently, which provides optimism for the office market for the long term.
While the city typically hosts the Global Energy Show each year, in September 2023 Calgary will also host the World Petroleum Congress, which is expected to attract up to 15,000 visitors. This event, as well as the boost in visitation to the Calgary Stampede, is contributing to the overall tourism forecast for Calgary, which is a five-per-cent lift in visitation over and above pre-pandemic levels. The pace of growth in passenger volumes at the Calgary International Airport in 2023 is very strong, led by U.S. and international visitation. Overall occupancy for the Calgary market for 2023 is projected to reach 63 per cent, which is ahead of 2019 results. While demand growth in downtown Calgary is expected to be very strong in 2023, the suburban markets are all performing very well and are expected to achieve occupancy ahead of 2019 performance. In terms of ADR, growth of 5.5 per cent for Calgary overall is projected for 2023, reaching $165. This is ahead of 2019 results and is in line with the level of rate achieved in 2014, the previous peak of the market. RevPAR in Calgary is projected to improve approximately 14 per cent overall to $104.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 61% | 24% | 33% | 74% | 63% |
| ADR | $145 | $113 | $119 | $157 | $165 |
| RevPAR | $88 | $27 | $40 | $91 | $104 |
Edmonton
The strength of the Alberta economy in 2023 is playing into the health of Edmonton. The city is experiencing strong employment and job growth, as well as population growth, which is contributing to an uptick in housing starts and growth in the construction sector in general. As with Calgary, a healthy energy sector in the province is beneficial to the Edmonton economy.
Continued investment into the tourism sector is helping to keep attractions fresh and new. It further helps that Forbes named Edmonton as one of the best places to travel to in 2023. Passenger statistics at Edmonton International Airport show significantly improved traffic through the airport – with volume up nearly 50 per cent relative to the same period in 2022.
From an accommodation perspective, supply growth in the Greater Edmonton market has been moderate over the last few years after experiencing years of relatively significant growth. As a result, the gains in market demand are leading to improvement in occupancy, which in 2023, is projected to reach ahead of 2019 at 57 per cent. Rate growth is expected in downtown and in each of the submarkets, which is leading to projected ADR growth of 9.5 per cent overall, or more than $10 by year end 2023. RevPAR for the Greater Edmonton accommodation market is projected at $78 in 2023, up from $65 in 2022.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 56% | 28% | 34% | 74% | 63% |
| ADR | $127 | $112 | $101 | $125 | $136 |
| RevPAR | $71 | $32 | $35 | $65 | $78 |
Regina
The accommodation market in Regina continues to benefit from the steady provincial economic conditions and from unchanging accommodation supply. With the exception of the entrance of one new property in 2021, the market has not experienced supply growth since 2017. Prior to that, market supply had grown at a rapid pace for five years. The recovery in market occupancy from the past supply increases and from the pandemic has been healthy as the market works toward achieving occupancy above 60 per cent for the first time since 2015. Room demand in Regina is projected to increase by eight per cent in 2023, with occupancy reaching 56 per cent, up from 52 per cent in 2022.
Encouragingly, market ADR is projected to be $133 in 2023, which is a level that hasn’t been achieved since 2013/2014. Overall, RevPAR for the Regina market is projected to increase to $74 in 2023, up approximately 14.5 per cent and well ahead of pre-pandemic results.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 57% | 29% | 35% | 542 | 56% |
| ADR | $120 | $103 | $102 | $126 | $133 |
| RevPAR | $68 | $30 | $35 | $65 | $74 |
Saskatoon
Early sentiments for Saskatoon’s economy for 2023 suggest healthy GDP growth driven by demand for the province’s natural resources, solid employment gains including in the hotel sector, and some consumer resilience which can buoy retail spending. The stable and healthy economy bodes well for the accommodation sector, as has been demonstrated thus far in 2023.
Guestroom demand in 2023 is projected to increase by eight per cent, leading to a four-point increase in occupancy to 61 per cent, up from 57 per cent in 2022. Guestroom supply in Saskatoon has remained constant since 2021, which has helped in improving occupancy to reach 2019 levels. As with many markets across the country in 2023, ADR growth is projected to be healthy at 11 per cent for Saskatoon, equating to a $14 rate lift over 2022. Overall, RevPAR is projected to improve by approximately 20 per cent in 2023 to $88, which is well ahead of pre-pandemic results.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 57% | 29% | 35% | 542 | 56% |
| ADR | $120 | $103 | $102 | $126 | $133 |
| RevPAR | $68 | $30 | $35 | $65 | $74 |
Winnipeg
A steady and diverse economy helps to keep Winnipeg in a good economic position year over year. In 2023, the manufacturing sector is performing well and is contributing to a positive GDP outlook. The accommodation market in Winnipeg is also generally very steady with a good mix of corporate, crew, and leisure travellers. In 2023, group demand is largely back and the city is expected to benefit from playing host to the World Police and Fire Games, which can attract up to 8,500 athletes plus spectators in late July/early August. The province and city have also been a welcome refuge to Ukrainian immigrants, many of whom spent at least the initial days of their arrival in area hotels.
In fact, the Winnipeg accommodation market is off to a roaring start in 2023. Occupancy has been pacing at approximately 80 per cent each month since the early part of the year. As a result, market occupancy is projected to increase to a robust 77 per cent in 2023, up 11 points from 2022 and well ahead of historic results. Demand growth is pacing well ahead of supply growth, which is expected to increase this year and next. The strong demand is helping operators generate sizeable increases in ADR. Overall, ADR for Winnipeg for 2023 is projected at $161, up from $143 in 2022. RevPAR is projected to increase to $124 in 2023, the first time in the sector’s history to reach RevPAR at more than $100.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 57% | 29% | 35% | 542 | 56% |
| ADR | $120 | $103 | $102 | $126 | $133 |
| RevPAR | $68 | $30 | $35 | $65 | $74 |
Winnipeg
A steady and diverse economy helps to keep Winnipeg in a good economic position year over year. In 2023, the manufacturing sector is performing well and is contributing to a positive GDP outlook. The accommodation market in Winnipeg is also generally very steady with a good mix of corporate, crew, and leisure travellers. In 2023, group demand is largely back and the city is expected to benefit from playing host to the World Police and Fire Games, which can attract up to 8,500 athletes plus spectators in late July/early August. The province and city have also been a welcome refuge to Ukrainian immigrants, many of whom spent at least the initial days of their arrival in area hotels.
In fact, the Winnipeg accommodation market is off to a roaring start in 2023. Occupancy has been pacing at approximately 80 per cent each month since the early part of the year. As a result, market occupancy is projected to increase to a robust 77 per cent in 2023, up 11 points from 2022 and well ahead of historic results. Demand growth is pacing well ahead of supply growth, which is expected to increase this year and next. The strong demand is helping operators generate sizeable increases in ADR. Overall, ADR for Winnipeg for 2023 is projected at $161, up from $143 in 2022. RevPAR is projected to increase to $124 in 2023, the first time in the sector’s history to reach RevPAR at more than $100.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 70% | 30% | 40% | 68% | 77% |
| ADR | $128 | $118 | $117 | $126 | $161 |
| RevPAR | $90 | $35 | $47 | $65 | $124 |
Toronto
The Greater Toronto Area (GTA) has continued to see solid tourism recovery in 2023, after the easing of pandemic-related travel and gathering restrictions in early 2022. However, like a number of other major markets in North America, it continues to see a delayed return to pre-pandemic corporate demand in addition to office vacancies rising significantly, reaching 15.1 per cent through Q2 2023. Business-related visitation in the city not expected to return to pre-pandemic levels until 2026. Despite this, economic growth in the GTA is expected to remain positive, although more temperate in 2023.
The downtown market has seen a strong return of domestic and international leisure travel, as well as meeting/conference travel. A full return of major conferences and festivals such Collision Conference, Pride, and Caribana have indicated the return to major events throughout the city and have helped support the growth in the suburban markets as well. Overall room demand for the GTA market is projected to increase by approximately 12 per cent in 2023. Following a couple of years where the region generally saw room supply run flat due to permanent closures off-setting new openings and other projects being delayed or pushed out, in 2022, supply in the GTA is increased about 2.2 per cent in 2022 with a just over 1,000 new rooms opening. It is expected that supply will continue to grow at a similar pace in 2023, increasing another 2.3-per-cent in 2023. Overall, occupancy in the GTA is projected to increase by six points, to 73 per cent in 2023.
In 2022, after two years of ADR declines, rate shot up more than 54 per cent adding $70 and surpassing 2019 levels by a little less than $20. As noted earlier, strong leisure and meeting-and-conference demand and rate yield was a significant force behind the very strong ADR recovery. In 2023 it is expected that further ADR growth will occur as demand levels continue to recover in the region. While the downtown and airport markets will lead the ADR growth, all the sub-markets are projected to see double-digit rate increases. Overall, it is expected that the GTA ADR will increase by an estimated 12 per cent, or about $25, in 2023. The strong growth in both occupancy and ADR are expected to drive RevPAR improvement of approximately $30, or 23 per cent for 2023.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 74% | 28% | 44% | 67% | 73% |
| ADR | $184 | $138 | $131 | $202 | $227 |
| RevPAR | $137 | $38 | $57 | $136 | $166 |
Niagara Falls
As one of the predominant leisure markets in Canada, Niagara Falls tourism is the main driver of the economy and a major source of employment in the market. The market welcomes travellers from across the country and around the world who visit each year to experience the Niagara Falls and various attractions in the area. Visitation to Niagara Falls was significantly impacted during the pandemic due to the prolonged border closure, travel, and gathering limitations. However, as the restrictions were eased, and ultimately lifted in early 2022, there was a significant rebound in visitation to the region. Overall visitor spending in the market is expected to continue to grow in 2023 off the base of this demand, surpassing pre-pandemic levels with strong and continued growth over the medium term.
The market is not expected to see any new supply growth in 2023, and with market demand projected to increase by 22 per cent, occupancy is projected to rise by 12 points to 67 per cent this year as the return of higher rated U.S. individual and group (i.e. tour) travel has helped drive demand since mid-2022. Following a 28 per cent ADR growth in 2022, driven by a strong summer travel season and the comeback of highspending cross-border and domestic travellers, the market ADR growth is projected to moderate to one per cent, reaching $203 in 2023. This change is attributed to increased demand in the lower-rate shoulder and off peak time periods. Even with this moderation, the market ADR is expected to finish more than $35 ahead of 2019 levels. As a result, Niagara Falls is projected to achieve RevPAR growth of 23 per cent. improving to $135 in 2023.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 66% | 25% | 33% | 55% | 67% |
| ADR | $168 | $116 | $156 | $201 | $203 |
| RevPAR | $112 | $29 | $51 | $110 | $135 |
Ottawa
Ottawa, the Nation’s Capital, and as the seat of the Federal Government, sees public administration account for approximately 31 per cent of GDP in the region. Historically, the region has been a government and meeting/conference market with a good base of seasonal leisure travel. Beginning in mid-2022, there has been strong growth in leisure travel which has been bolstered by the return of large events such as Winterlude, and Canada Day celebrations, among others. Further, CNN Travel named Ottawa one of the top-10 places to visit in 2023. Activity in the market from government sources is also expected to improve with the return of in-person government sessions and return-to-work policies. However, as with many major markets across the country, the office market has seen continued increases in vacancy rates, reaching 13.6 per cent thorough Q2 2023, and prolonged negative net absorption.
With less than a one-per-cent increase to overall room supply projected for the region, market occupancy is projected to improve by seven points to 69 per cent in 2023 with demand from government, meeting/conference and other sources expected to continue to ramp up activity.
Following growth of more than 35 per cent in 2022, the market ADR is projected to improve by 10 per cent or $17 to $194 in 2023. The strong ADR growth has primarily been driven by rate growth in the suburban markets, which are following the trend driven by the downtown market. As a result of the very good growth in both occupancy and ADR market, RevPAR is expected to finish at $134, a 23 per cent or $25 improvement relative to 2022.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 71% | 30% | 41% | 62% | 69% |
| ADR | $167 | $136 | $130 | $177 | $194 |
| RevPAR | $119 | $41 | $54 | $109 | $134 |
Montreal
In 2022, GDP growth for the Greater Montreal Area was good. While growth is expected to be relatively flat in 2023, economic growth is expected to be improve more positively over the medium term. Montreal benefits from a well-diversified economy, which is supporting the return of corporate and meeting/conference demand. It is expected that these segments will play significant role in the demand recovery going forward. However, the Montreal office market has seen growing vacancy rates since the start of the pandemic, as with many major markets in Canada, reaching 17.4 per cent through Q2 2023. This is expected to continue in the short term as corporate demand in major urban centres lags pre-pandemic levels.
The Greater Montreal Area saw someof the most significant impacts during 2020 and 2021 as a result of strict provincial government-mandated travel and gathering restrictions, in addition to the national border closures. Montreal sees a significant number of international visitors, not only from the U.S., but also from Europe (namely France) due to its linguistic and cultural ties. The return of these demand sources throughout 2022 and 2023 has supported a strong recovery in accommodation demand in the Montreal market.
Occupancy in 2022 improved to 63 per cent on the back of the strong return of leisure travel, however still below pre-pandemic levels as corporate demand continued to lag. This is expected to continue to drive improvement through 2023, with accommodation demand increasing 15 per cent, and supply increase of about two per cent leaving market occupancy at 71 per cent in 2023. The higher-rated leisure-travel demand helped drive a significant improvement in ADR in 2022 to $206, surpassing pre-pandemic highs. It is projected that strong rate growth will continue in 2023, with growth of about seven per cent resulting in an ADR of $221 for the year. Overall, RevPAR in the Greater Montreal market is expected to improve about 21 per cent as a result of continued demand and rate growth, improving to $157 in 2023.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 73% | 21% | 33% | 63% | 71% |
| ADR | $184 | $141 | $152 | $206 | $221 |
| RevPAR | $134 | $30 | $50 | $130 | $157 |
Quebec City
Similar to Montreal, Quebec City sees a significant number of international visitors due to its cultural and linguistic ties to France. The region features a diversified economy and is the seat of the provincial government. GDP growth in the region was strong in 2022 at four per cent, while it is expected to slow down in 2023/24, it is projected to remain positive over the medium term. With the largest portion of visitation coming from domestic pleasure travel, this is expected to remain a vital support to the accommodation market going forward. In 2022, the market benefited from a return of major festivals and events, as well as meeting and conference activity and leisure travel. These segments are expected to continue to ramp up throughout 2023.
In 2022, Quebec City saw a significant improvement in overall accommodation demand, increasing by 73 per cent with the lifting of pandemic-related restrictions in the early part of the year. This demand rebound, against minimal increase to market supply, led to occupancy improving to 57 per cent in 2022. Demand in the market is expected to see continued growth in 2023, improving a projected 17 per cent, pushing occupancy to 67 per cent for the year. There are no significant supply changes in 2023 expected for the market.
Market ADR saw dramatic improvement in 2022 off the strong growth in leisure demand, increasing 31.5 per cent, surpassing pre-pandemic highs. While not as significant as 2022, rate growth in Quebec City is expected to be positive in 2023 at three per cent, lifting ADR to $222. Overall, RevPAR in the market is expected to improve over 20 per cent in 2023 as a result of the strong demand and positive rate growth, increasing to $149 for the year.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 69% | 25% | 33% | 57% | 67% |
| ADR | $177 | $140 | $164 | $215 | $222 |
| RevPAR | $122 | $35 | $55 | $124 | $149 |
Halifax/Dartmouth
As the economic centre of Atlantic Canada, Halifax is the largest cultural and financial hub in this region with significant employment in trade, health care, professional services, education, and public administration. Additionally, Halifax is home to several internationally recognized universities, regional health-care facilities and the military. From a tourism perspective, the region offers some significant heritage and cultural attractions such as the Halifax waterfront, the Citadel Hill, and Peggy’s Cove.
Over the last couple of years Halifax/Dartmouth has seen robust GDP growth and although this is expected to moderate in 2023, down 0.5 per cent, economic fundamentals remain strong with a falling unemployment rate, strong housing starts and population growth.
The accommodation market in Halifax/Dartmouth is expected to see a recovery to pre-pandemic levels in 2023, with occupancy rates projected to reach 70 per cent. This rebound is attributed to increaing demand during the shoulder and off-peak periods, along with a 1.9 per cent growth in supply. The strong rebound in leisure related travel and general economic conditions helped drive a significant increase in rate for the region in 2022 as ADR increased to $180, a 55-per-cent improvement over 2021. Rate growth is projected to remain strong in 2023 with an additional 10 per cent growth projected to finish the year at $199. Overall, RevPAR in the Halifax/Dartmouth region is projected to grow almost 16 per cent in 2023, reaching a new high of $139.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 70% | 28% | 41% | 67% | 70% |
| ADR | $155 | $112 | $116 | $180 | $199 |
| RevPAR | $108 | $31 | $47 | $120 | $139 |
St. John’s
St. John’s is the largest, and capital city of Newfoundland and Labrador. In recent decades, the economy in the region has become heavily focused on natural resources, including several offshore oil and gas developments, which has resulted in fluctuating economic conditions depending on the “health” of these commodities. The resumption of the West White Rose project and related activities has bolstered demand. Most significant though is the special-purpose demand related to the Ukranian refugee arrival program being facilitated in the city. Finally, St. John’s is also seeing an increase in tourism-related activity with domestic pleasure travel nights more than six per cent of 2019 levels.
These conditions coupled with stable supply is expected to result in occupancy increasing by 11 points to 71 per cent in 2023. These occupancy levels for the market are comparable to 2014 performance. Month-over-month rate growth has been extremely strong because of the high demand levels providing compression and supporting good yield. As a result, ADR for the year is projected to grow by almost six per cent, or $9, over 2022 to $152. The strong improvement in occupancy and ADR is projected to drive to a RevPAR increase of approximately 26 per cent to $108 for 2023. This RevPAR level will bring the market performance back to 2014 levels, before the oil and gas industry downturn.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 56% | 23% | 35% | 60% | 71% |
| ADR | $133 | $104 | $105 | $143 | $152 |
| RevPAR | $74 | $24 | $37 | $85 | $108 |
All projections are rounded.
National Market Outlook
The forecast for the national accom-modation market are a combination of projections completed for the various major markets as well as the provinces and territories across Canada. These forecasts consider the various economic, travel and supply and demand dynamics at play. While the National forecast provides a macro, directional indication of industry performance, there are numerous factors that will impact the recovery and performance of individual markets, such as sources/mix of guestroom demand and seasonality which impact the performance results for 2023 and beyond.
National accommodation supply remained muted in 2022, growing marginally at 0.6 per cent. In every market across the country, occupied room night demand accelerated in 2022 and is expected to see additional growth in 2023. While the return of corporate demand has been slower, especially in major markets, meeting/conference and government demand is growing as leisure demand continues to be the most-significant driver. Nationally, demand is projected to increase by approximately 10 per cent in 2023, with occupancy improving five points to 66 per cent.
Nationally, the rate growth has remained very strong, with large gains built in the first several months of the year. Although the pace of rate growth for the rest of the year is expected to soften, rate growth is still projected to increase eight per cent or $14 in 2023, finishing $30 ahead of 2019. As a result of the growth in both occupancy and ADR, RevPAR is projected to increase by 17 per cent, to $128, up $19 over 2022.
| 2019 Actual | 2020 Actual | 2021 Actual | 2022 Actual | 2023 CBRE (F) | |
| Occupancy | 65% | 30% | 42% | 61% | 66% |
| ADR | $163 | $128 | $135 | $179 | $193 |
| RevPAR | $106 | $39 | $57 | $109 | $128 |
