TORONTO — Cautious optimism was the order of the day at the 11th annual PKF Outlook, held Oct. 7 at Toronto’s Westin Harbour Castle Hotel. Hotel owners and operators were out in full force, anxious to hear what industry analysts had to say about how the hotel industry fared in 2010 and how it’s projected to do next year.
A panel of PKF analysts took those in attendance on a journey through 2010 to assess indicators and trends. Among the highlights: a total of 7,000 new rooms entered into the hotel system in 2010 with an additional 4,000 expected to come onboard in 2011. The decline in room supply bodes well for the industry, giving it a chance to regain some lost ground. According to David Larone, director, PKF, 5.5-million room nights were lost in the past year. But, it appears the industry is getting back to where it was in 2008. Occupancy is forecast to sit at 60 per cent next year, down by three per cent from 2008, when it sat at 63 per cent. ADR is expected to come in at $131, the same rate as in 2008. Among the cities with the highest RevPAR growth are Halifax, Quebec and Niagara Falls, followed by Montreal, Toronto and Ottawa.
On the West Coast, the stats show the Olympics helped boost Vancouver to a higher standing. “The bottom line is up by seven per cent because of these events,” said PKF’s Fran Hohol. But now it’s back to reality. “Vancouver is living with a hangover,” quipped Larone.
The decline in number of U.S. visits to Canada continues to pose challenges for the tourism industry. “Since 9/11 travel has dropped significantly,” explained Hohol. She pointed to stats that showed travel from the U.S. was down by 6.7 per cent in 2009 and 1.9 per cent in 2010; it’s projected to grow by 2.1 per cent in 2011, she added. Overseas travel showed similar patterns, dropping by 12.7 per cent in 2009. But, surprisingly, it was up in 2010 by 5.4 per cent. Hohol noted promise in the Asian market, with travel expected to increase from Japan, Korea and China.
On the investment side, the number of hotels sold in the past year has dropped dramatically. Based on year to date June 2010, only 32 hotels have been sold, representing a volume of $270 million. Last year, there were 74 hotels sold, compared to 115 in 2006. “There’s a lot of money out there looking for a home,” said Larone.
So what’s on the horizon? According to Larone, “2010 was a little bit better than we anticipated, and we’re looking at about the same for 2011. I can’t emphasize enough that we’re coming off a low level, but we’re moving in the right direction. If you’re still alive in 2010, you’ve got something to look forward to. But we’re not suggesting a dramatic recovery; it will be a slow process. Everyone’s projections for 2011 are slower than 2010.”