Canada Hotel occupancy declined in January due to decreased leisure demand

Friday, February 23, 2024

In January 2024, Canada’s hotel industry experienced a slight decline in occupancy but maintained positive growth in average daily rate (ADR), as per the latest data from CoStar. CoStar, renowned for its online real estate marketplaces and analytical insights, offers valuable information on property markets.

Comparing January 2024 to the previous year (percentage change from 2023):

– Occupancy: 49.6% (a decrease of 1.7%)
– Average daily rate (ADR): CAD175.38 (an increase of 4.3%)
– Revenue per available room (RevPAR): CAD87.00 (a rise of 2.6%)

“Transient occupancy fell 3.7% year over year, with most of the decline taking place on the weekends, suggesting that individuals are pulling back on discretionary spending,” said Laura Baxter, CoStar Group’s director of hospitality analytics for Canada.

“Warm weather and a lack of snow in popular ski areas contributed to the shortfalls as well, with particularly steep occupancy declines in resorts across Western Canada. Whistler and Banff hotels, for example, recorded occupancy declines of 9% and 12%, respectively. On the positive side of the spectrum, the overall hotel sector is outperforming metrics in the wider economy, with the room rate growth outpacing the 2.9% inflation reading.”

In January 2024, Manitoba boasted the highest occupancy level among the provinces and territories, reaching 58.8%, albeit 8.1% lower than in 2023.

Toronto emerged as the leading major market with the highest occupancy rate at 61.4%, marking a 2.2% increase compared to January 2023.

Conversely, Prince Edward Island reported the lowest provincial occupancy at 28.6%, experiencing a significant decline of 20.5% from 2023. Meanwhile, at the market level, Edmonton exhibited the lowest occupancy rate at 44.3%, showing a modest increase of 2.9% over the previous year

“The return of group and international travel is expected to be among the main drivers of improvement this year,” said Baxter. “These demand sources should benefit Canada’s largest cities to a greater degree than other location types, and therefore urban hotel performance growth will likely outpace the national forecast.”

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