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Coronavirus Concerns Weigh On Hotel Predictions For 2020

Toronto Hotel

Concerns over the coronavirus have put a pessimistic spin on Canadian hotel projections for 2020, according to a new CBRE report.

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Toronto's hotel occupancy rate is expected to drop only slightly from 75% to 74% in 2020, according to the CBRE report.

"Our history with SARS (the 2003 viral outbreak) is that there are some short term impacts," CBRE Hotels Senior Managing Director Brian Stanford told Bisnow. "But we recover quickly out of that. One of the challenges is we just don't know."

Overall, the CBRE Hotels Q4 2019 update predicted occupancy nationally would remain flat this year, with average daily rates and revenue per available rooms expected to show only modest gains.

"Softer occupancies and minimal rate growth across the country deterred RevPAR growth in 2019," said the CBRE Q4 2019 Hotel Update Report. "Looking forward to 2020, with the uncertainties surrounding the COVID-19 virus and continued downward pressures on rate growth, CBRE is projecting national occupancy to hold at 65%, with rate gains in line with inflation, and a 2.5% increase in RevPAR."

In Ontario, occupancy is expected to jump minimally to 69% in 2020, with ADR ($167, up 2.5%) and RevPAR ($114, up 2.1%) also showing modest gains. Toronto, with an occupancy rate of 75%, is expected to drop slightly to 74% in 2020, despite modest gains in ADR ($188, up 2.5%) and RevPAR ($139, up 1.8%). 

"Forecasting into 2020 [for Eastern urban centres], we expect continued slight declines in occupancy as additional supply enters the markets coupled with modest rate growth, resulting in moderate RevPAR growth," the report said.

Stanford characterized the report a bit more plainly.

"We had five, six years of unprecedented growth. We expect a little uptick in 2020," he said "But a small uptick is still positive growth."