2008 MARKET FORECAST

In 2007, the combined 4 Western Canadian cities of Vancouver, Calgary, Edmonton and Winnipeg experienced a 2.5% growth in demand and 7.2% increase in average daily rates over 2006 levels.  In comparison, the collective 6 Central and Eastern Canadian cities grew by 2.5% in demand with a marginal increase in rate (0.5%).  As in 2006, the country’s strong Western performance coupled with lacklustre Central and Eastern Canada results led to a national occupancy level of 65%, representing a 2.6% growth in demand in 2007.  At the same time, rates rose 3.7% to end 2007 with a national average daily rate of $127.

Our forecasts for 2008 reflect the continued strength of hotel performance in Western Canada, with a widening gap specifically in rate performance between the West and the rest of Canada. 

With a 1.9% increase projected supply in 2008, coupled with a similar increase of 2.0% in demand, the national occupancy is forecasted to remain at 65%, with the average daily rate increasing by 4.0% to reach $132.  

 

 

 

 

RevPAR growth amongst the 4 Western Canadian major cities topped 9.7% in 2007, as compared to the collective Eastern Canadian major markets’ performance of 0.6%.  This combined impact resulted in national RevPAR growth of 4.6% in 2007. 

Led once again by Western Canada, RevPAR growth is projected to continue to be strong at a national level through 2008, increasing by over 4% to reach $86. Despite the strong performance of the 4 Western Canadian major cities, the Quebec City market is projected to lead the country in RevPAR growth in 2008, with RevPAR increasing by nearly 16% from $85 in 2007 to $99 this year.  This is projected to be a one-time spike caused by the 400th Anniversary celebrations.  Beyond Quebec City, strong economic growth is projected to continue to help drive higher rates in the Western Canadian markets of Winnipeg, Calgary, Edmonton and Vancouver, resulting in RevPAR growth of 10%, 9%, 9% and 8% respectively.

While the overall number of occupied room nights in both the Toronto and Montreal markets is projected to increase, 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 a 3% decline in RevPAR projected for the Montreal market in 2008.