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CANADIAN LODGING OUTLOOK February 2001 Year-to-Date The Canadian Lodging Outlook is a joint monthly publication of Smith Travel Research and HVS International, Vancouver and Toronto, Canada |
| by Carrie Russell, Vice-President, HVS International�Vancouver
The simple answer to that question is yes, with supply comes demand. This is because in most mature hotel markets a certain level of latent demand exists. Latent demand is demand that is not currently being realized and consists of unaccommodated demand and induced demand. Unaccommodated demand refers to individuals who are unable to secure accommodations in a market because all of the local hotels are filled. These travellers end up deferring their trip, settling for less desirable accommodations, or staying at properties outside the market area. If a hotel is reaching occupancy levels of 75% or greater on any given night, it is likely unaccommodated demand exists. Induced demand represents room nights that are attracted into a market. These room nights can be induced through the opening of a new demand generator such as a convention centre or manufacturing plant, but also through the opening of a hotel. A new hotel can bring a new franchise affiliation and reservations system into a market, or unique facilities, which draw new guests. A new property will also have a sales team, which can target markets that haven�t been focused on in the past. All of these factors will bring guests that haven�t previously visited into the market. When forecasting market occupancy, the challenge is trying to accurately quantify the level of latent demand that exists. The tables below summarize how new supply impacted demand growth in the Calgary Airport and Does supply generate demand? the Vancouver Airport markets, both of which have experienced significant supply increases in recent years.
In Calgary, demand growth was higher in years with supply increases, excluding 1999. In 1999, demand declined due to the impact of the slowdown in the oil and gas industry in that year. It is interesting to note, that in 2000 with the improved conditions in the oil sector, demand growth rebounded and was almost double the supply growth in that year. The trend is similar in the Vancouver Airport market. As large increases in supply entered this market in 1998, demand also began to increase significantly. Demand growth often does not keep pace with supply growth and both the Calgary Airport and the Vancouver Airport markets have experienced occupancy declines. But these declines would have been worse if latent demand was not present in the market. When forecasting occupancy for a market with new supply slated to be opened, it is important to consider the level of latent demand present in order to be accurate in your forecast. |
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| Nova Scotia Area | 1,193 | 47.0% | 47.0% | $70.62 | $67.05 | $33.19 | $31.51 | 0.0% | 0.0% |
| Halifax, NS | 2,286 | 53.6% | 48.0% | $99.32 | $97.41 | $53.24 | $46.76 | 0.0% | 11.7% |
| Montreal, QC | 13,622 | 55.7% | 54.7% | $122.04 | $113.50 | $67.98 | $62.08 | 1.1% | 2.9% |
| Quebec City, QC | 3,588 | 52.0% | 57.3% | $102.69 | $100.07 | $53.40 | $57.34 | 0.2% | -9.1% |
| Quebec Area | 3,786 | 45.1% | 44.0% | $75.32 | $72.31 | $33.97 | $31.82 | 0.0% | 2.4% |
| Toronto Downtown | 10,722 | 55.6% | 54.7% | $142.85 | $136.17 | $79.42 | $74.48 | 1.1% | 2.7% |
| Toronto North/East | 6,449 | 53.2% | 52.6% | $102.58 | $99.56 | $54.57 | $52.37 | 1.4% | 2.7% |
| Toronto Airport/West | 8,074 | 71.2% | 69.2% | $115.78 | $108.51 | $82.44 | $75.09 | 2.8% | 5.8% |
| Ottawa, ON | 7,439 | 63.0% | 60.8% | $125.10 | $110.43 | $78.81 | $67.14 | -1.5% | 2.1% |
| Ontario East | 4,447 | 47.2% | 48.0% | $83.96 | $78.80 | $39.63 | $37.82 | 1.5% | -0.2% |
| Niagara Falls, ON | 5,510 | 32.1% | 35.5% | $83.48 | $78.97 | $26.80 | $28.03 | 7.2% | -3.0% |
| Ontario Southwest | 5,575 | 50.8% | 50.0% | $94.50 | $89.90 | $48.01 | $44.95 | 0.9% | 2.6% |
| Ontario North | 4,152 | 50.2% | 51.5% | $83.00 | $79.94 | $41.67 | $41.17 | 0.3% | -2.2% |
| Ontario Central | 6,566 | 52.5% | 50.2% | $85.20 | $82.72 | $44.73 | $41.53 | 0.3% | 4.8% |
| Winnipeg, MB | 3,230 | 55.4% | 54.6% | $86.65 | $83.63 | $48.00 | $45.66 | 3.0% | 4.7% |
| Regina / Saskatoon, SK | 3,675 | 59.3% | 60.5% | $80.21 | $76.58 | $47.56 | $46.33 | 4.1% | 2.0% |
| Calgary, AB | 7,457 | 55.3% | 54.9% | $104.65 | $104.89 | $57.87 | $57.58 | 6.4% | 7.2% |
| Edmonton, AB | 5,244 | 59.7% | 53.4% | $84.86 | $80.71 | $50.66 | $43.10 | 1.1% | 13.1% |
| Alberta Area | 4,979 | 55.8% | 54.9% | $74.87 | $72.19 | $41.78 | $39.63 | 1.7% | 3.4% |
| Mountain Regions, AB | 2,744 | 56.8% | 61.8% | $147.37 | $135.52 | $83.71 | $83.75 | 0.0% | -8.1% |
| Vancouver, BC | 11,853 | 52.0% | 48.5% | $110.08 | $107.45 | $57.24 | $52.11 | 2.7% | 10.0% |
| British Columbia Area | 4,348 | 36.1% | 39.5% | $66.95 | $63.54 | $24.17 | $25.10 | 1.3% | -7.5% |
| Victoria, BC | 2,950 | 42.9% | 41.2% | $81.10 | $80.25 | $34.79 | $33.06 | 0.0% | 4.3% |
| Provinces | |||||||||
| Alberta | 20,424 | 56.7% | 55.5% | $97.33 | $95.35 | $55.19 | $52.92 | 2.3% | 4.6% |
| British Columbia | 22,598 | 49.6% | 48.4% | $125.91 | $115.85 | $62.45 | $56.07 | 1.8% | 4.3% |
| Manitoba | 3,433 | 55.7% | 54.9% | $85.50 | $82.46 | $47.62 | $45.27 | 2.4% | 3.9% |
| New Brunswick | 2,701 | 49.7% | 52.7% | $80.58 | $75.90 | $40.05 | $40.00 | 0.0% | -5.6% |
| Newfoundland | 1,521 | 55.0% | 47.5% | $87.27 | $83.29 | $48.00 | $39.56 | 1.3% | 17.3% |
| NovaScotia | 3,479 | 51.2% | 47.6% | $89.61 | $86.41 | $45.88 | $41.13 | 0.0% | 7.5% |
| Northwest Territories | INS | INS | INS | INS | INS | INS | INS | INS | INS |
| Ontario | 58,495 | 54.5% | 54.4% | $110.05 | $104.12 | $59.98 | $56.64 | 1.5% | 1.6% |
| Prince Edward Island | 784 | 34.0% | 30.4% | $56.76 | $55.55 | $19.30 | $16.89 | 0.0% | 11.8% |
| Quebec | 21,435 | 53.1% | 53.2% | $111.51 | $104.83 | $59.21 | $55.77 | 0.5% | 0.4% |
| Saskatchewan | 5,121 | 53.5% | 54.1% | $76.24 | $72.43 | $40.79 | $39.18 | 1.8% | 0.8% |
| Yukon Territory | 344 | 35.7% | 27.4% | $76.40 | $74.84 | $27.27 | $20.51 | 0.0% | 30.2% |
| Canada | 140335 | 49.6% | 49.8% | $93.67 | $87.66 | $46.46 | $43.65 | 1.4% | 1.0% |
| HVS Toronto, led by Jon Lantz and Lorenzo Palumbo, in conjunction with Betsy MacDonald, MAI, AACI, (Managing Director of the Vancouver office), to diversify the range of services for our Canadian clients, established Hospitality Venture Services, Inc., Real Estate Broker. Now, in addition to appraisals, market studies, valuations, and the variety of consulting services offered, HVS Toronto provides immediate access and extremely strong contacts in hospitality brokerage in Canada. For further information, contact HVS Toronto at (416) 686-2260. |
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Kimberley Tyls HVS International 4235 Prospect Road North Vancouver, BC V7N 3L6 (604) 988-9743, ext. 21 [email protected] www.hvsinternational.com |
| Also See | Limited-Service Growth in Canada - Where�s it Going? / The Canadian Lodging Outlook / January 2001 |
| Optimism With a Hint of Caution, As Analysts Predict a Softer Year for the Canadian Hotel Industry / Mar 2001 | |
| HVS Canada in Review - Year End 2000 / The Canadian Lodging Outlook / March 2001 | |
| Canadian Lodging Outlook / May 2000 Year to Date Statistics / HVS International - Canada / July 2000 | |
| The Rule of Thumb Method...Does It Still Hold Weight? / Elaine Sahlins - HVS / Oct 2000 | |
| What�s Hot and What�s Not in Western Canadian Hotel Markets / Mar 2000 |