In preparation for the 2007-2008 Canadian Accommodation Outlook Forums, held in Toronto and Vancouver in September, PKF Consulting examined the top line and bottom line growth potential for the industry nationally and regionally.
PKF Consulting is forecasting RevPAR growth nationally of 3.8% for 2007, and 4.8% for 2008. The PKF forecast for year-end 2007 is a 66% occupancy at an ADR of $127, with RevPAR at $83. Our 2008 Outlook is for a 66% occupancy at an ADR of $131, with RevPAR at $87.
On a “National” basis, the Market Outlook is healthy. However there are notable differences between the regions, with more robust market growth realized in Western and Atlantic Canada this year. Based on strong year to date performance, PKF is forecasting RevPar growth of 8.6% in Western Canada for 2007. Our projection for 2008 is 4.5%. Central Canada is forecasted to achieve 1.3% RevPar growth in 2007, and 4.9% in 2008. In Atlantic Canada, we are forecasting 6.0% RevPar growth for 2007 and 2.8% in 2008.
With regards to the national bottom line, PKF’s Outlook is for a 5.5% increase in profitability this year, and a 4.1% increase in 2008. 2007 profitability should be in the range of $11,600 per available room, increasing to $12,100 in 2008.
The imbalance in regional performance becomes even more pronounced when looking at bottom line growth. With strong occupancy and ADR performance year to date, PKF’s Outlook for bottom line growth in Western Canada is a 14.2% increase in 2007, equating to profitability of $14,100 per room. Profitability is expected to grow a further 5.4% in 2008, reaching $17,000 per room. Central Canada is expected to realize a decrease in profitability this year with bottom lines forecast to fall 2.6% to $9,100 per room. A 6.6% recovery is projected for Central Canada in 2008 with profitability increasing to $9,700. Atlantic Canada is forecast to realize bottom line growth of 8.1% this year, and 5.0% in 2008, equating to profitability of $8,100 and $8,500 per room respectively.
In addition to examining the top line and bottom line growth potential for the industry on a national and region basis, PKF also reviewed the performance of the Canadian Accommodation Industry by property type.
PKF Consulting is forecasting RevPAR growth for full service hotels of 3.4% for 2007, and 4.4% for 2008. Limited service hotels are forecast to see RevPAR increase 3.7% this year, and 3.6% in 2008. All Suite/Extended Stay properties are forecast to realize RevPAR growth of 2.4% this year, and by a healthy 4.7% in 2008. Based on current performance, PKF’s Outlook for Canadian Resorts is a 4.8% growth in RevPAR in 2007, and 4.5% in 2008.
With regards to bottom line performance, all property types are expected to realize positive growth this year and next.
PKF is forecasting growth of 6.1% for Full Service hotels in 2007, and 4.3% in 2008. Limited Service hotels are forecast to see a 4.9% improvement in profitability this year, followed by a further 4.1% increase in 2008. PKF’s Outlook for All Suite and Extended Stay hotels is a 3.5% increase this year and a 3.4% increase in 2008. Based on healthy year to date performance, Canadian Resorts are forecast to realize bottom line growth of 7.5% in 2007 and 3.8% in 2008.
Overall growth prospects bode well for the hotel industry in 2008, and PKF remains committed to the accommodation industry of Canada and the many initiatives that continue at local, regional and national levels. For full details of the 2007-2008 Canadian Accommodation Outlook Forum, and to download a copy of the associated presentation or other publications, please visit our website at www.pkcanada.com.
Brian Stanford, Director
PKF Consulting Toronto
