The consultancy firm provided hotel owners and operators with a look at the last year as well as a forecast for the upcoming year. Unfortunately while the year began on the right foot, continued economic turmoil and global geopolitical unrest have impacted the Canadian marketplace. The good news, however, is forecasts are calling for the numbers to trend in the right direction in 2012 — up. According to PKF, RevPAR increased by two per cent in 2011, but the bottom line was flat. Projections call for the top line to grow by four per cent next year while the bottom line is expected to grow by seven per cent.
“Economic factors are driving the numbers. Consumer confidence is subsiding,” and “it won’t return until 2013. We keep chasing that elusive turnaround year, but we’re not expecting positive growth from the U.S. until 2013,” said Fran Hohol, PKF. Going one step further, David Larone, principal, quipped, “We don’t have a lot of U.S. business to lose. Ten years ago 65 per cent of hotel revenues were domestically driven; in 2005, that number was 72 per cent and today it’s grown to 80 per cent.” With the Eurozone struggling for solvency, tourism numbers from the U.K, Germany and France are down, but on the positive side, the number of Asian tourists is up by 3.4 per cent. Interestingly, Hohol explained there has also been a market shift in the country. “Toronto is now [gaining] stronger growth on Chinese tourists than Vancouver.”
On the development side, the PKF reps pointed out there are between 30,000 and 50,000 rooms in the pipeline, with only 4,000 rooms forecast to be developed next year, the lowest level since 2005. “Fifty-five per cent of supply is in Western Canada,” noted Hohol.
Overall, while the news hasn’t been stellar, demand growth projections for 2011 are better than expected. “We originally thought there would be a three-per-cent increase in demand, but we’ve increased that now to 3.5 per cent, one per cent ahead of 2007,” said Brian Stanford. The year will close up with average occupancy of 61 per cent and a rate of $128, while projections for next year call for 62-per-cent occupancy and a rate of $131.
Central Canada, which boasts 50 per cent of the national room supply, is outpacing national numbers. But, reminded Larone, “ADR is static, up only two per cent for a projected $129 in 2012. “We’re where we were in 2007,” he added.
According to PKF, which produces the “Economic Impact Study” with the Hotel Association of Canada every two years, last year Canada’s hotel industry posted revenues of $16.4 billion, contributing $2 billion in value added, and $8 billion in salaries and wages. With a total of 370,000 hotel rooms in the marketplace, PKF tracks sales activity of 200,000 of those rooms monthly.