pKF consulting 2004 market outlook

National Market Outlook

With a strengthening economy, and anticipated increases in both business and leisure travel, the expectation was for improved market performance going into 2003, with PKF projecting demand to outpace supply, and with rates to grow at over 2.0%. The industry was well on track to the end of the first quarter, with demand up by about 1.5% and average daily rates up by almost 2.0%. With the onset of SARS and a softening US economy, both business and leisure travel suffered throughout the second and third quarters. As a result of these unexpected shocks to the economy, PKF’s projection of a 62% occupancy and a $118 average daily rate did not materialize. With demand levels down over 4.0%, and average daily rates down 3.0%, 2003 ended with a 59% occupancy and an average daily rate of $112 nationally, reflecting a RevPAR decrease of almost 8.0%.

At a national level, our forecasts for 2004 reflect about a 5.0% growth in demand, with occupancy levels expected to reach 61% and average daily rates forecast to increase by about 3.0% to $116. Demand levels will still be 1.1% below 2000 levels and average daily rates will only recover to 2002 levels. As a result, RevPAR will still be 2.4% below 2000 and 2002 levels.

Major Market Outlook

Our projections for individual markets reflect our general view of demand recovery, but are also reflective of the specific supply and demand factors impacting each market.

2004 PKF Outlook by Major Market Occupancy & ADR
	2002 Actual		2003 Actual		2004 Outlook
Greater Vancouver	63%	$118	62%	$113	63%	$117
Calgary	64%	$107	61%	$105	63%	$106
Edmonton	72%	$91	61%	$95	62%	$98
Winnipeg	62%	$92	60%	$92	61%	$94
Greater Toronto Area	64%	$130	57%	$118	62%	$128
Ottawa	65%	$125	62%	$124	63%	$126
Niagara Falls	57%	$131	50%	$120	52%	$124
Greater Montreal	68%	$138	65%	$136	66%	$139
Quebec City	65%	$145	60%	$139	62%	$145
Halifax/Dartmouth	73%	$114	73%	$119	73%	$122
CANADA	62%	$116	59%	$112	61%	$116