After the onset of the economic downtown in the latter part of 2008, national occupancy for the Canadian accommodation industry witnessed a decrease from 65% by year-end 2007, to 63% in 2008, yet positive rate increases in the first 8 months of 2008 helped ADR to rise by 3.1% by the end of 2008, from $127 to $131.
With the global recession taking full effect in Canada through 2009, accommodation demand contracted by 6.4%, which in conjunction with a 1.8% increase in supply, resulted in a decline in national occupancy to 58%. Moreover, the industry experienced a significant overall rate decrease of 4.7% in 2009, falling to a national average daily rate of $125.
In 2010, we see the industry beginning a slow and steady ascent back to health, with demand expected to start growing again at a pace greater than supply, off a modest base of earnings. By year end, demand is projected to grow by 3% and supply by 1.8%, resulting in a forecasted 59% occupancy nationally. When combined with an encouraging rate growth of 2.5%, industry RevPAR is expected to reach $75 in 2010.
Overall, with the economic downtown negatively affecting all 10 major markets, against a 2% gain in supply, occupancy dropped six points in 2009. The 10 major markets witnessed a 6.3% decrease in ADR below 2008 levels to achieve an average daily rate of $129. However, with Canada’s economy expecting a measured recovery, positive demand growth of 3.7% is projected for Canada’s ten major markets in 2010. With a 2.2% increase in supply, occupancy is expected to slightly increase by 1 percentage point to 62%. Average daily rates for Canada’s major urban markets are projected to grow by 3.1% 2010, marking a $4 increase to $133.
The Winter Olympic and Paralympics’ Games and an expanded Convention Centre, Vancouver is projected to achieve the highest RevPAR growth at 12% in 2010. Toronto, Montreal, Winnipeg, Quebec City and Halifax/Dartmouth are also projected to post healthy RevPAR growth ranging from a high of 7.8% to 2.6%, while Edmonton and Calgary will see declines, and Niagara Falls and Ottawa will see modest growth.
Fran Hohol, CMC
Principal
PKF Consulting Inc. Toronto
