Photo of Rosanna Caira
Photo by Nick Wong

With a new season, comes new hope for the year ahead.

After three years of turmoil and turbulence, all indicators are showing positive news for the Canadian hotel industry. According to the Canadian Lodging Industry Overview, a report produced by Cushman & Wakefield, “there is a significant uptick in demand and RevPAR improvements across the major Canadian markets of Toronto, Montreal, and Halifax, with each of these cities exceeding pre-COVID levels for the first time” since the pandemic hit the industry. According to this report, overall, 2022 RevPAR has increased by 91 per cent over the previous year and is 3.5 per cent higher than year-end 2019 levels.

Certainly, that’s incredible news given that the onset of COVID-19 caused a RevPAR decline of 60 per cent in 2020. Looking back, the report shows that the beginnings of the recovery started earlier than expected in 2021 with a 35 per cent improvement in RevPAR. According to the report, after a weak Q1, the recovery took hold in Q2 with RevPAR increasing by 95.3 per cent in 2022. The data shows the growth was largely fuelled by ADR growth as demand still lags behind pre-COVID levels.

Starting last June, ADR exceeded 2019 levels and was driven by pent-up leisure demand concentrated on weekends and vacation periods, as well as general inflation in the economy. The report says that room demand was also up, but it only began to exceed 2019 levels in September, with December showing the largest gain over 2019 levels.

The cities that have witnessed the largest RevPAR improvements this year have been Toronto, Montreal, and Halifax at 161 per cent, 159 per cent, and 158 per cent respectively. Following on their heels are Quebec City, Calgary, and Vancouver, which are all in the 124 per cent to 126 per-cent growth range.

On the flip side, Victoria, B.C., recorded the lowest RevPAR growth for this year-to-date period even though the city was consistently one of the best-performing markets in the country over the COVID period and, therefore, has less room for growth coming out of the pandemic.

Given the positive uptick in numbers, it’s not surprising that the pace of the recovery in 2022 has re-ignited interest in new hotel development. While land values have continued to increase, the report says “there has been some moderation in development costs. Moderating costs along with stronger market results have improved the feasibility of projects in many markets, including suburban growth areas and secondary and tertiary markets that have been under-served in the past.”

Certainly, these positive indicators bode well for hotel operators and the hotel development community. But it’s important to note that pervasive labour shortages impacting the industry present a mammoth challenge — one the hotel industry needs to grapple with immediately in order to ensure the continued sustainability of the industry.


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