Global economic uncertainty will help boost investment in Canada’s hotel real estate sector.
A report from CBRE forecasts rising demand from domestic and international investors which will boost investment in the sector beyond 2018’s $1.5 billion and the 10-year average of $1.8 billion.
Meanwhile, it expects supply to rise 2% in 2019, the largest single-year increase since the financial crisis in 2008.
“Canadian hotel operating performance and investment metrics have never been stronger, and all indications point to investment volume matching if not exceeding historical averages in 2019,” said Bill Stone, Executive Vice President, CBRE Hotels. “The only factors that cause significant shifts in the hotel market are either geopolitical events — such as 9/11 and the global financial crisis — or the delivery of new hotel supply, which is what we are predicting we will see this year. New supply is a good challenge to have as it reflects the strength of the market and Canada’s ability to compete on the world stage.”
Growth in revenue-per-room
The increased investment will be justified by a 4% increase in the revenue-per-room rate.
As well as traditional hotel investors, others will be interested in mixed use commercial real estate with a hotel element; and there will be a shift of new supply into smaller cities.
“The hotel industry in Canada is performing at all-time highs, with record occupancy, average daily rates and RevPAR, as well as bottom-line performance,” noted David Larone, Senior Managing Director, CBRE Hotels. “Our hotels are full, and we are in good shape to continue to grow top and bottom lines in 2019.”