Current conditions in the market are a far cry from the doldrums seen during the peak of the pandemic
Canada’s hotel market performance has seen a dramatic across-the-board improvement this year compared to the height of the pandemic, according to a new analysis by Avison Young.
The national occupancy rate for the asset class was 75.5% as of July 2022 – a level not seen since August 2019 (78.8%), Avison Young said.
“Market performance in July 2022 was the best since the onset of the pandemic with revenue per available room recording its strongest-ever result at $162.10,” Avison Young reported.
This is despite transaction velocity in terms of both capital (down by 10% to $346.8 million) and number of trades (down by 44% to 32 deals) declining on an annual basis during the first half of the year.
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“The first five months of this year accounted for 28 of the 32 transactions year-to-date, with a material slowdown taking place in June and July,” Avison Young added. “The two main reasons for this slowdown are, firstly, rising interest rates making financing more difficult to secure and, secondly, hoteliers are experiencing positive hotel performance which hasn’t been realized, for many, since pre-COVID-19 times.”
Overall, Canada’s hotel segment saw year-over-year increases of 69% in occupancy, 37% in average daily rates, and 131% in revenue per available room as of July 2022 – all of which are “great testaments to the health of the sector,” Avison Young concluded.
