As any hotelier knows, metrics are an important tool to measure success. Sure, the hotel industry is all about people, whether we’re talking about hotel guests or the associates who serve them. But at the end of the day, the numbers matter because usually they don’t lie — in fact, they often tell the real story. That’s why when hoteliers get together, apart from catching up on recent news in the industry, they tend to ask each other a litany of questions including ‘How’s occupancy?’ ‘How good is your average daily rate?’ and more importantly ‘What’s your RevPAR?’ In an effort to measure the overall health of the industry, they might also talk about who’s buying what and the total investment value of the industry.
Interestingly, many of those questions were discussed at last month’s PKF Consulting/CBRE Hotels’ Outlook conference. Analysts from the recently merged companies spoke of industry fundamentals, touching on the recent economic downturn in Western Canada, the declining dollar and its impact
on tourism, as well as the overall health of the industry.
But, perhaps the bigger story is that rates are finally starting to increase.Despite a drop of eight per cent in RevPAR in Western Canada, the good news is that the hotel industry saw ADR growth of four to six per cent in all markets. Overall, the hotel industry is strong. Occupancy is up in most cities, new hotels are popping up everywhere and there’s a healthy interest in acquisitions, with total transaction volume hitting almost $2 billion. Over the past decade, one of the common themes heard at many of these information sessions is that hoteliers had been reluctant to raise rates for fear of losing guests. In fact, in recent years, David Larone, senior managing director of PKF, has repeatedly urged hoteliers to raise their rates. His persistence seems to have finally paid off. “We’re seeing some of the best numbers ever, with national growth of five per cent,” said Larone at the conference. “We haven’t seen these kinds of numbers since the 1980s.”
While the drop in oil prices and weaker growth has slowed expectations of business travel, the industry is expected to see recovery next year. An influx of marketing dollars through Destination Canada should also help increase U.S. travel to Canada. And, with the price of real estate continuing to grow in markets such as Vancouver and Toronto, strong occupancy, and continuing strength in ADR, the experts predict a strong 2016, giving everyone in the hotel industry something to smile about.
Once again, we’re happy to present the Who’s Who Market Almanac issue, featuring the hugely popular Who Owns What? poster. We hope it helps you better understand the changing and complex hotel landscape.