TORONTO — In what has become a fall tradition, PKF Consulting recently presented its annual outlook forum in Vancouver and Toronto, highlighting the year’s economic indicators and offering 2013 projections.
“The outlook in 2011 was disappointing,” reflected David Larone in his opening address. “The industry was down over seven per cent from 2010. The demand was there but the rates weren’t.” Larone went on to say that the same theme applies to 2012, with rates lower than what the industry can support. “We’ve had to revise our bottom-line projections from seven to three per cent,” he said. “
According to Larone, the industry generated about 40-million room nights in Central Canada last year. Much of the top line is driven by the limited- and select-service market as well as the all-suite and extended-stay market. “The full-service market is dragging numbers of RevPAR and bottom line,” he explained.
While most of the country suffered a non-descript year, Western Canada showed strong pockets of growth, especially in Alberta and B.C. According to Beth Walters, of PKF’s Vancouver office, the city’s new convention centre had a great year in 2011.
Central Canada is a different story, as the Ontario government works to balance the budget with cuts. “Cost-cutting is not a positive factor for economic growth,” said Brian Stanford, director, PKF. Still, there are new demand generators, such as the idea of building a casino in Toronto, which could encourage tourism. Overall, Toronto is posting a strong 2012, with group events such as the Microsoft conference accounting for 70,000 room nights in July. Occupancy is expected to remain flat at 66 per cent with RevPAR expected to improve by one per cent to $86 by year-end. According to Stanford, the introduction of 600 hotel rooms in the luxury sector should help the city achieve better rates. Further east, in Montreal, student protests hampered growth, negatively impacting tourism. Out east, Fran Hohol, principal, said “The Atlantic provinces were below the national average last year, with six-million occupied room nights. The industry is expected to finish the year with a national average occupancy of 62 per cent, ADR of $129 and RevPAR of $80.”
With the domestic market forming 84 per cent of overnight travel to Canada, more needs to be done to attract increased international travel, especially from the U.S. market. “We’ve had 1.5-per-cent growth this year from the domestic market, and that’s expected to grow to two per cent next year and 2.5 the following year. For the first time in several years, the number of visitors from the U.S. market has grown for the past eight months, but growth is projected to be flat next year with a 0.1 per cent increase expected. Business travel and the leisure market are predicted to grow by 2.1 per cent next year.
Larone cited the nation’s capital as one market success story. “Ottawa has moved its rate by five per cent in 2012, with a three-per-cent increase in room supply, posting 71-per-cent occupancy and a rate growth of about three per cent,” he said.
“We’re moving in the right direction,” concluded Larone. “We’ve been waiting for the recovery for several years, and, while it has started, it doesn’t look like any recovery we’ve seen in last 30 years. Still, 2013 is expected to be a much better year than 2012, and certainly 2011.