Marcus & Millichap

Canada Hospitality Investment Forecast

Second Half 2018 Outlook

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Demand Surges For Canadian Hotels Amid Heightened Tourism

International tourism strengthens, boding well for hotels. Strong tourism is benefiting hotel property performance in Canada as travelers fill hotels. International travel, in particular, remains an important driver for hotel demand in the country. Between January and May, trips of one or more nights from non-residents rose 1 percent from the same time the prior year as a record 5.9 million international visitors traveled here. Tourism to Canada from China, in particular, is increasing at a much faster pace, rising 14.8 percent during this same time frame. Canada’s new tourism campaign hopes to double the number of Chinese visitors and boost the number of international tourists by 30 percent by 2021, likely boding well for room demand from these travelers.

Room demand strong across Canada, raising occupancy. Healthy room demand from travelers has improved hotel occupancy 250 basis points during the prior two annual periods ending in June, advancing RevPAR 15 percent during this same time. Nearly all provinces and major markets registered strong occupancy and growth in revenue metrics since July 2017. Vancouver and Toronto, in particular, continue to lure visitors, enhancing hotel occupancy. The rate in each market rose more than 100 basis points during the year ending in June.

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