B.C. hotel activity stays strong as the sector languishes in Alberta
By Peter Mitham | December 4, 2019
Continental divide
Hotel activity in Canada may have flattened over the past year, but a key takeaway from the Western Canadian Lodging Conference at the JW Marriott Parq Vancouver last week was that B.C. can thank an active conference and tourist trade for another good year.
B.C. hotels saw growth of revenue per available room (RevPAR) drop from a lofty 10% to just 3% over the past year, which sounds like a disaster except for the fact that growth across the country has fallen from about 5.5% last year to near zero. Nationally, the slowdown could last two years, said Carrie Russell, managing director of HVS Canada, but B.C. is poised to continue enjoying good times for the foreseeable future.
Steady growth in demand and a lacklustre increase of just 240 rooms, or 0.4% of the total stock, mean stiff competition for existing rooms. This will put upward pressure on nightly rates and room revenue.
“There’s certainly potential for more traffic, more tourism, to come into Vancouver,” Russell said. “[But] we’re starting to max out our occupancy levels and get some rate sensitivity there.”
The situation in B.C. is quite the opposite from that of Alberta, which continues to wince from oilpatch woes.
“Tourism, as much as it’s strong in B.C., it’s still a smaller component in Alberta,” said Greg Kwong, executive vice-president and regional managing director with CBRE Hotels in Calgary. “What’s going to stimulate Western Canada … is capital investment into the energy sector, and that in turn will filter down to the lodging industry.”
Participants in last week’s conference didn’t see the hard times ending any time soon, with the supply of rooms in Alberta growing at 3% (a whopping 3,000 rooms) while a lack of business travel keeps many properties underperforming. RevPAR shrank 2% last year.
“[It’s] a lot of supply being absorbed in an environment where we haven’t seen a ton of demand growth,” Russell observed.
Big Picture Conferences, organizer of the Western Canadian Lodging Conference, did announce that it would do its part to correct the matter, however. The 2020 edition of the conference will be held in Calgary, kicking off a tradition of moving between venues in B.C. and Alberta to make the conference that much more western Canadian.
Shifting values
While participants in the Western Canadian Lodging Conference last week railed against the hit Alberta’s oilpatch is taking, participants in an Urban Land Institute (ULI) discussion of emerging trends facing real estate in 2020 focused on the need to address climate change.
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