Checking in
The upcoming Western Canadian Hotel and Resort Investment Conference promises its annual state-of-the-market insight from the movers and makers of the hospitality sector, but a recent event valuation firm HVS hosted in Vancouver offered a glimpse of what’s in store. The good news is that Vancouver is a hot market for hotels, with limited new supply until late 2016 that should help keep rates strong. Growth in room rates is the strongest of any city in Western Canada. This in turn has boosted revenue per available room, something other cities have achieved only through increased occupancies.
But with occupancies in Vancouver largely having maxed out during the 2015 FIFA Women’s World Cup and good convention activity, Carrie Russell, managing director of HVS Canada, said there’s only so much growth that can be expected from occupancies.
“Vancouver, at 77%, is maxing out what it can do in terms of the seasonal occupancy levels,” Russell said. “There will be a little bit of a new supply increase with the Trump opening, so we’re forecasting occupancy at 76% for the market next year, and then a 7% increase in the average room rate.”
In short, downtown hotel rates have nowhere to go but up until new supply is added to the market next year, beginning with the Trump International Hotel.
Loonie times
Canada’s weakened dollar has helped increase overseas visitor counts, which have risen approximately 10% over the past year and are contributing to an overall rise in overnight stays of approximately 4% in 2015.
U.S. visitors have been particularly important to Victoria, where a new 17-storey DoubleTree-flagged hotel opened its first rooms in August. The hotel will have 181 rooms and 89 suites when it’s fully operational.
“It’s really all about the dollar there,” Russell said at a review of hotel markets the firm hosted last month. The past 18 months have been good for Victoria, and with strong demand and limited new supply she said revenue per available room has increased 15% this year over last.
Second home
Similar to hotels, resort communities and recreational properties appear to be benefiting from the downturn in Alberta. Central 1 Credit Union reports that weaker conditions have helped increase interprovincial migration to 3,500 people a quarter this year.
Eric Van Maren, managing general partner for Osoyoos Cottages LP, said as much a couple of months ago in noting that “generous buyout” packages were letting Alberta buyers retire early. Similarly, lots at Montane, a Parastone Developments Ltd. project in the Kootenay community of Fernie, are seeing 40% of interest coming from buyers in Alberta and beyond.
On the market since Thanksgiving 2014, 45 of the project’s initial lots remain available; a further 80 units are planned for release in a second phase.
All told, permits for 140 units have been granted for the site to date.
Oriented toward the local ski hill amid a network of hiking and mountain bike trails, Montane capitalizes on the city being a getaway. •
