Hotel market performance expected to be in line with the 2011-2017 average of $2.3B
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Colliers International’s fresh “2018 Canadian Hotel Investment Report” stated that the value of the country’s hotels (on a per room basis) is expected to rise by 12.8% this year.
And while 2018 hotel transaction volumes likely won’t reach or exceed last year’s $3.5 billion, Colliers is predicting it to be in line with the 2011-2017 average of $2.3 billion.
“These healthy increases are due to a combination of relatively low supply of new hotel rooms and robust demand, as well as solid operational growth and resilient investor confidence in the sector,” according to Robin McLuskie, Colliers managing director of hotels in Canada.
A major contributor to this projected market stability is that Canada remains a preferred destination for global capital. Foreign investment in the nation’s hotel segment stood at more than $1.3 billion, representing 43% of total volume in 2017.
“Canada has benefited from a wave of cross-border capital looking for stable yields outside of their home borders, with 41% of transaction volume between 2013 and 2017 attributed to cross-border sources of capital,” McLuskie told Property Biz Canada.
“We expect purchases by foreign investors to moderate in 2018, principally due to the overall lack of large individual and portfolio transactions available for sale,” he added. “In cases where there are long-term land plays as part of a sale, foreign investors will continue to be aggressive bidders.”
Read more: Canadian hotel market exhibiting continuous strength – CBRE
The Colliers report tallied 37 hotel transactions across Canada totalling around $350 million in the first quarter of this year alone.
And the segment is showing no signs of stopping at the moment, as new hotel construction is gaining pace in major urban and suburban markets. The rate of growth is predicted to be at 1.5% to 2% annually over the next three years, a level of activity last seen back in 2005 to 2008.
Montreal, Halifax, Ottawa, Calgary, and Edmonton are expected to lead the charge in new hotels, Colliers noted.
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