Just a year after having the second-biggest drop in revenues-per-room in the country, Vancouver hotel owners are seeing both occupancy levels and incomes rising, according to industry analyst HVS International.
Citing an increase in the city’s convention market and cruise ship passengers, HVS analyst Monique Rosszell said downtown hotel bookings were up 7.2% in the first quarter, compared with the first three months of 2013.
“Downtown Vancouver hotels are expected to see an increased level of demand in both 2014 and 2015,” Rosszell said.
A lack of new product coming to the market will help to keep hotel bookings and revenues rising, she said.
Only two new hotels are underway – the 187-room Trump International, which will not open until 2016, and the 75-room Crystal Blue that completes next year. High land costs in Vancouver are expected to keep new construction in check for at least the next three years.
In 2013, hotel occupancy levels in downtown hotels were 71% and are expected to reach 72% this year and 74% in 2015: this is a big turnaround from the last five years, when levels of 60% were not uncommon. Even more encouraging for hotel owners, REVPAR (revenue per available room) are flirting with record levels.
Last year, the average REVPAR in downtown Vancouver was $118 per night; this year it is $162 with a similar level expected in 2015.
As a comparison, in a snapshot taken last year during a week that included the popular Vancouver Sun Run, HVS found that the average REVPAR of a city hotel had plunged 17.5 per cent from a year earlier. The only region with a bigger decline in revenue was Prince Edward Island, which was still months away from its tourist season.
Today, the average room rate in downtown Vancouver is $173 per night, the highest level since 2011.
“The new inventory is expected to put upward pressure on room rates,” Rosszell said, “The market will quickly absorb the modest amount of new supply that is set to open in 2015. Strong REVPAR increases of 4.6% and 5.3% are projected for 2014 and 2015, respectively.”
