From a geographical perspective, Canada’s Continental Divide is the line that threads its way along the crest of the Rocky Mountains dividing rivers flowing west to the Pacific from drainage flowing north or east to the Arctic and Atlantic Oceans. However, from the perspective of the Canadian accommodation industry, the Continental Divide, also known as the Great Divide, has shifted 1,800 km eastward to the Manitoba/Ontario border.
In 2006, the combined 4 Western Canadian cities of Vancouver, Calgary, Edmonton and Winnipeg experienced a 5.9% growth in demand and 6.7% increase in average daily rates over 2005 levels. In comparison, the collective 6 Central and Eastern Canadian cities grew by 4.0% in demand with only a 2.0% increase in rate. The country’s strong Western performance coupled with lacklustre Central and Eastern Canada results led to a national occupancy level of 65%, representing a 4.2% growth in demand over 2005. At the same time, rates rose 4.0% to end 2006 at an average daily rate of $124.
At a national level, our forecasts for 2007 reflect a continuation of the Great Divide scenario, with a widening gap in rate performance between the West and the rest of Canada. With a further 1.7% increase in supply in 2007, against overall demand growth of 3.1%, the national occupancy is forecast to improve to 66%, with the average daily rate increasing by 3.0% to reach $127.
RevPAR growth amongst the 4 Western Canadian major cities topped 12.5% in 2006, as compared to the collective Eastern Canadian major markets’ performance of 2.6%, resulting in national growth of 6.1%. Led once again by Western Canada, RevPAR growth will continue to be strong at a national level through 2007, increasing by over 4% to reach $83. The Edmonton market is projected to lead the country in RevPAR growth in 2007, with RevPAR increasing by 11% from $74 in 2006 to $82 this year. Strong economic growth, including gains in employment will also help bolster demand levels in the other Western Canadian markets of Calgary, Winnipeg and Vancouver markets, resulting in RevPAR growth of 10%, 9% and 6% respectively.
While the accommodation industry continues to experience growth in demand in the Toronto and Montreal markets, supply pressures, weak transient leisure demand together with mixed results in convention demand, and a reluctance to ask for rate will temper RevPAR growth to 2% in Toronto with no lift in RevPAR projected for the Montreal market in 2007.
