Hoteliers, developers and investors descended on the Hyatt Regency Vancouver last week for the Western Canadian Lodging Conference.
The annual meeting largely was imbued with positivity as industry experts discussed strong market fundamentals and outsiders’ growing interest in hotels while debating how to remedy labour shortages and tensions with short-term rentals.
Here are Green Street News’ top takeaways from the conference.
Strong fundamentals but bifurcation in the West
Nationally, occupancy is flattening out near 2019 levels, while revenue per available room is rising on the heels of higher average daily rates. Those higher rates, though, are starting to “hit a ceiling” and test the demand of domestic leisure travellers.
Locally, there is a bifurcation in western markets, with Alberta leading and Manitoba lagging in terms of year-to-date RevPar growth. Declines in Manitoba were somewhat attributed to hotels housing evacuees and asylum seekers in 2023 – figures that are now pulling out of the market.
Calgary’s and Edmonton’s performances were driven in part by strong economic recovery, a phenomenon also reported in Saskatoon. Greg Kwong, CBRE’s regional managing director for the Prairies, said he was “bullish” on Saskatchewan’s hotel markets.
Carrie Russell, senior managing partner at HVS, called Banff the “superstar” of Canada, as the market reported an 11% increase in ADR and 8% jump in RevPar despite a dip in occupancy.
Kwong and Russell, who shared market data and insight during a morning presentation, predict Calgary will have the strongest year-over-year increase in RevPar in 2025, while Vancouver will lead in actual growth.
Investor interest is mounting
Hotels’ strong performance is not going unnoticed, and the asset class is expected to “catch a lot more attention” from investors in 2025. Ontario investors have already begun looking west, with their sights particularly set on Calgary. Bigger players, including pension funds, have begun to show interest in the hotel space for the first time.
On the lending side, there is a good opportunity presented by the underperformance of other assets, including the office and condominium markets. Interest rate cuts have led owners and operators to seek out financing for acquisitions and renovations.
“BDC has already been a long-term supporter of the Canadian hotel industry,” said Starry Lyon, director of corporate financing for the Business Development Bank of Canada, during a capital funding panel. “We are always open for business.”
Conversions are coming
Weakness in other asset classes, particularly office, have presented opportunities for redevelopment. In some cities, such as Vancouver, a lack of available land makes a conversion more attractive, while Calgary’s conversion incentive program is proving to be a draw.
Examples of office-to-hotel conversions include the Element by Westin Calgary Downtown, a 226-room property by PBA Group, and Synvest’s revitalization of the Arts & Crafts building in Vancouver into a 73-room independent hotel.
That said, developers are having to get creative with floorplates and aesthetics, including heating, elevator capacity and amenities.
Labour pains
Labour shortages, strikes and union negotiations, and caps on immigration are proving to be continuing concerns for the industry.
To appease the issues, hoteliers are offering higher wages and increased flexibility to staff, and industry advocates are working with government officials to attract temporary foreign workers and domestic youth to the sector.
Tech takeover
Artificial intelligence is finding its footing in the hotel sector. From tools to schedule shifts and robot vacuums to clean corridors, chains have begun to roll out AI in various ways that will help free up workers from mundane tasks and make them more strategic.
AI is also becoming a key player in guests’ pre-arrival experience, offering options such as early check-in or late check-out, for a fee.
