The Canadian accommodation industry is beginning to build momentum, with rate growth rising and Western Canada paving the way. By year end 2005, national occupancy levels advanced to 63.4%, representing a 4.6% growth in demand over 2004. Average daily rates also rose 2.1% to end 2005 at an average daily rate of $119.
At a national level, our forecasts for 2006 reflect a continued 4.0% growth momentum in both rate and demand. The industry has not seen rate growth at this level since the 1998 through 2000 period, when rate growth exceeded 5.0% per annum, after actual rate declines earlier in the decade. With a further 1.9% increase in supply in 2006, against demand growth of 4%, the national occupancy is forecast to improve to 65%, with the average daily rate reaching $123.
RevPAR growth was particularly strong in Western Canada in 2005 and growth will continue to be strong at a national level through 2006. The Calgary market is projected to lead the country in RevPAR growth in 2006, with RevPAR increasing by over 13% from $81 in 2005 to $91 this year. Strong economic growth, including gains in employment will also help bolster demand levels in both the Edmonton and Vancouver markets, resulting in RevPAR growth of 10% and 8% respectively.
While the accommodation industry continues to experience growth in demand and rates in the Toronto and Montreal markets, supply pressures, weak transient leisure demand together with mixed results in convention demand, will temper RevPAR growth to 3% in Toronto and 2% in Montreal in 2006.
