Canada hotel performance followed seasonal trends in November

November 2023 (percentage change from November 2022):

• Occupancy: 62.1 per cent (+0.5 per cent)

• Average daily rate (ADR): CAD179.18 (+5.8 per cent)

• Revenue per available room (RevPAR): CAD111.19 (+6.4 per cent)

“Canada hotel performance returned to single-digit growth in November,” says Laura Baxter, CoStar Group’s director of hospitality analytics for Canada.

“This performance is steady given the likely contraction of the wider economy. Room rates drove most of the RevPAR growth, with all segments experiencing an increase, albeit at a slower pace. This result confirms the trend of slowing ADR growth over the last few months, particularly with transient rates, which showed a 4.7 per cent year-over-year lift—the smallest increase since early 2021. Softer room rate growth is expected to continue through mid-2024, with declines expected for a short time before returning to positive territory.

“The marginal occupancy increase outperformed our forecast, which predicted a minor decline. Year-over-year improvements in group occupancy helped keep the metric afloat, and although it’s too early to call this a trend, it is a step in the right direction as occupancy from that segment remains 11 per cent below pre-pandemic levels. Stronger group demand was also evident for full-service, urban and suburban hotels. Occupancy contractions continued for limited-service hotels, however, the segment’s room rate growth remains robust, outperforming the national average by 1.1 percentage points.”

Among the provinces and territories, Manitoba recorded the highest November occupancy level (70.6 per cent), which was 7.5 p below 2022.

Among the major markets, Toronto saw the highest occupancy (74.1 per cent), which was 1.0 per cent behind November 2022.

The lowest occupancy among provinces was reported in Prince Edward Island (46.5 per cent), down 22.5 per cent against 2022. At the market level, the lowest occupancy was reported in Edmonton (+4.0 per cent to 55.7 per cent).

“Looking ahead, we expect occupancy to decline each month through the end of Q1 2024,” says Baxter. “Downward pressure on discretionary spending is anticipated, largely due to higher interest rates cycling through to more mortgage holders with renewals on the horizon.”