Mood Positive In Canadian Hotel Industry Following Strong 2017
A positive mood continues in the hotel industry, buoyed by a record transaction volume of $3.5B in 2017, according to the annual Canadian Hotel Investment Sentiment Survey from Colliers.
The report, which surveyed leading real estate executives on their thoughts and impressions of the hotel industry, pointed to a strong economy as one key reason behind the sale of 150 hotels, including single-asset and portfolio sales, in 2017.
“Canada’s economy shifted into high gear in 2017 with GDP expanding by 3%; the strongest growth rate since 2011 and registering as the fastest advance among the G7 countries. Robust growth in employment and consumer spending, notable government infrastructure investment and a sizable rebound in oil prices continue to propel Canada’s economy with 2018 expected to expand by a healthy 2.1%,” according to the survey.
Coupled with record tourist arrivals in 2017 and a 7.7% increase in revenue per available room, industry executives appeared upbeat about the prospects for 2018. Of investors, 76% reported their sentiment for hotel investment over the next three to five years was positive — the highest number since 2010.
Primary strategies for 2018 varied among those surveyed. Twelve percent expressed an intent to sell, doubling from 2016. Those intending to build rose to 19%, a five-year high. Those planning to acquire hotels dropped 5 percentage points to 40%, while those planning to hold, renovate or expand in 2018 sat at 29%.
Toronto continued to be the most desired hotel investment market in Canada, followed closely by Vancouver. Montreal and Calgary rounded out the top four among respondents.
A more negative mood was expressed toward financing, with 71% of those surveyed saying the cost of debt became more expensive over the last 12 months, with 73% expecting debt to continue to rise in 2018.