Canadian hotels mirror seasonal trends in november: Report

Thursday, December 21, 2023

In line with expectations, Canada’s hotel performance demonstrated a monthly decline but continued to show year-over-year growth, as per CoStar’s November 2023 data. CoStar, a prominent provider of online real estate marketplaces, information, and property market analytics, released the following statistics for November 2023 compared to the same period in 2022:

• Occupancy: 62.1% (+0.5%)
• Average daily rate (ADR): CAD179.18 (+5.8%)
• Revenue per available room (RevPAR): CAD111.19 (+6.4%)

Laura Baxter, CoStar Group’s director of hospitality analytics for Canada, remarked, “Canada’s hotel performance rebounded with single-digit growth in November. This stability is noteworthy considering the broader economic slowdown. The growth in room rates primarily drove the increase in RevPAR across all segments, albeit at a slower pace. This underscores the ongoing trend of decelerating ADR growth, particularly noticeable in transient rates, which saw a 4.7% year-over-year increase, marking the smallest rise since early 2021. We anticipate a continued slowdown in room rate growth until mid-2024, with a brief period of decline before returning to positive territory.”

Baxter added, “The slight uptick in occupancy surpassed our projections, which had forecasted a minor decline. Year-over-year enhancements in group occupancy contributed to sustaining this metric. Although it’s premature to label this as a trend, it’s a positive step forward, especially considering that occupancy from this segment remains 11% below pre-pandemic levels. Notably, stronger group demand was evident in full-service, urban, and suburban hotels. However, limited-service hotels experienced continued occupancy contractions, despite maintaining robust room rate growth, surpassing the national average by 1.1 percentage points.”

Examining the provinces and major markets:

• Manitoba recorded the highest November occupancy at 70.6%, down 7.5% compared to 2022.
• Toronto displayed the highest occupancy among major markets at 74.1%, trailing by 1.0% from November 2022.
• Prince Edward Island reported the lowest provincial occupancy at 46.5%, marking a 22.5% decrease from 2022. At the market level, Edmonton reported the lowest occupancy at 55.7%, up by 4.0%.

Baxter also projected, “Looking ahead, we anticipate a decline in occupancy each month until the end of Q1 2024. The looming prospect of higher interest rates is expected to exert downward pressure on discretionary spending, particularly impacting mortgage holders facing renewals.”

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