The Canadian hotel industry experienced its best performance in eight months during May 2024, according to data from CoStar, a leading provider of real estate information and analytics. The increase in revenue per available room (RevPAR) was primarily driven by a rise in room rates, with occupancy showing only marginal growth.
Laura Baxter, CoStar Group’s director of hospitality analytics for Canada, stated that while upscale and luxury hotels saw occupancy growth, lower-tier hotels experienced a decline. Despite this, the increase in average daily rates (ADR) across all hotel classes kept RevPAR comparisons in positive territory.
While the transient segment of the market saw a 2.4% increase, group occupancy dropped by 5.5%. The growth in the transient segment did not translate to higher rate growth, which is a trend that requires monitoring, as some markets are experiencing rate declines due to softening demand.
British Columbia led the provinces and territories with the highest occupancy rate at 74.3%, exceeding 2023 levels by 3.3%. Vancouver topped the major markets with an occupancy rate of 83.8%, showing a 1.2% increase from May 2023. On the other hand, Prince Edward Island reported the lowest provincial occupancy at 54.5%, marking a 9.5% decline from 2023. Calgary had the lowest market occupancy at 67.0%, down 1.9% from the previous year.
Despite the positive May performance, industry experts remain cautious about the future. Hoteliers are optimistic about the upcoming summer high season, citing recent positive consumer sentiment reports about domestic leisure travel and lower interest rates. However, many hoteliers are also reporting shorter booking windows compared to previous years, making it difficult to gauge the strength of demand.
STR’s 2024 forecast predicts slower rate growth, at 1.9%, due to an expected deceleration in the last three quarters. The forecast also predicts a 0.5% decrease in occupancy year over year, driven by weaker-than-expected demand due to softening economic conditions.
