| North of the Border |
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2007 Canadian Hotel Market Outlook
In preparation for the 2006-2007 Canadian Accommodation Outlook Forums, held in Toronto and Vancouver in October, PKF Consulting went to the industry to determine their views on top line and bottom line growth prospects for 2007.
On a national basis, almost 50% of industry participants believe that RevPAR growth will be somewhere between 2% and 5% in 2007. At the same time, about one quarter of the respondents expect RevPAR will be under 2%. Another 20% believe it will grow between 5 and 10% and 6% expect growth of over 5%. PKF Consulting is forecasting RevPAR growth of 6.6% for 2006 and 4.8% for 2007. Consequently, the industry Outlook for 2007, is generally on par with our projections. The PKF Consulting forecast for year-end 2006 is a 65% occupancy at an ADR of $123, with RevPAR at $80. Our 2007 Outlook is for a 66% occupancy at an ADR of $127, with RevPAR at $84.
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From the Industry's Perspective |
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2007 Market Outlook |
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RevPAR Growth 2007 |
National |
West |
Central |
Atlantic |
| Decline |
1% |
0% |
0% |
14% |
| 0-2% |
23% |
23% |
24% |
14% |
| 2-5% |
49% |
40% |
69% |
43% |
| 5-10% |
21% |
28% |
3% |
29% |
| Greater than 10% |
6% |
8% |
3% |
0% |
| PKF 2006 Forecast |
6.6% |
11.0% |
6.5% |
2.8% |
| PKF 2007 Outlook |
4.8% |
4.8% |
4.7% |
4.4% |
Based on strong year to date performance, PKF is forecasting RevPAR growth of 11.0% in Western Canada for 2006. Our projection for 2007 is 4.8%. Despite strong 2006 performance, 40% of industry participants concur with PKF that RevPAR growth will be between 2 and 5% in 2007. However, overall industry optimism remains strongest in Western Canada with 36% of respondents expecting top line growth of more than 5%.
Central Canada is forecasted to achieve a 6.5% RevPAR growth in 2006 and 4.7% in 2007. 69% of industry participants concur with PKF that RevPAR growth will be between 2 and 5% in 2007, however only 6% of respondents are expecting top line growth of more than 5% in Central Canada.
In Atlantic Canada, we are forecasting 2.8% RevPAR growth for 2006 and 4.4% in 2007. While 43% of the industry concur with PKF that RevPAR growth will be between 2 and 5% in 2007, 14% expect growth under 2% and a further 14% are actually expecting a decline.
With regards to the national bottom line, PKF's Outlook is for a 13.1% increase in profitability this year and a 5.8% increase in 2007. Forty percent of the industry operators and owners are expecting profitability to increase between 2 and 5%, while 32% are expecting bottom line growth of over 5%, including 8% which are expecting growth in excess of 10%. 2006 profitability should be in the range of $10,600 per room, increasing to $11,200 in 2007.
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From the Industry's Perspective |
|
2007 Bottom Line Outlook |
|
Bottom Line Growth 2007 |
National |
West |
Central |
Atlantic |
| Decline |
5% |
5% |
0% |
29% |
| 0-2% |
22% |
25% |
21% |
0% |
| 2-5% |
40% |
36% |
48% |
43% |
| 5-10% |
24% |
25% |
21% |
29% |
| Greater than 10% |
8% |
8% |
10% |
0% |
| PKF 2006 Forecast |
13.1% |
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