New data show that it takes an extraordinary event for Metro Vancouver hotels to fail to be the most occupied and priciest among major Canadian markets.
Vancouver hotels' occupancy levels and room rates led all major Canadian markets in February, for the third consecutive month, according to CoStar, a global provider of real estate data, analytics and news.
The likely reason Toronto hotels last beat Vancouver for occupancy and pricing in November was that Toronto hosted six Taylor Swift concerts that month. Those mega-events pushed the average daily November hotel room rate in Toronto up 29 per cent, year-over-year, to $305.42, CoStar data show. Vancouver's average hotel room rate that month was only $233.38.
That pop singing sensation then performed three shows in Vancouver in December, helping push Vancouver hotel occupancy and prices into the stratosphere. Vancouver hotels' average daily room rates in December jumped 53.6 per cent, compared to the same month in 2023, to $319.28. The entire local economy was rejuvenated.
CoStar's new data shows Vancouver hotels were on average 71.5-per-cent occupied in February, with a $216.16 average daily room rate. That compares with Toronto's 68.4-per-cent average hotel occupancy and $213.96 average daily room rate during the month.
The two Albertan cities of Edmonton and Calgary, in that order, endured the lowest average hotel-room occupancies and room rates in February, among major Canadian cities.
Jan Freitag, CoStar's national director of hospitality analytics, told BIV an important metric for hoteliers is how fast they can grow their average daily room rates.
"What hoteliers need in order to drive margin is to drive the average room rate above that of inflation," he said."You want your top line to grow faster than your expense line."
Unfortunately for Vancouver hoteliers, that did not happen in February.
Vancouver hotels performed well compared with other major Canadian markets but their performance was not as strong as it was in February 2024.
The $216.16 average room rate that Vancouver hotels charged in February was only 1.6 per cent higher than the rate they charged in February 2024. That lagged the province's three-per-cent year-over-year inflation rate that month. Occupancy, at 71.5 per cent in February, was two percentage points lower than the 73.5-per-cent occupancy rate in the same month one year earlier, according to CoStar.
Some evidence points to a decline in tourist visits in February.
Statistics Canada on March 10 released preliminary data showing 4.1 million international visitors arrived in Canada in February, down 10.9 per cent from February 2024.
That was the first year-over-year decline in international visitors to Canada in a month in almost four years – since March 2021, when the comparable month in 2020 included the final weeks of pre-pandemic travel.
Freitag said one thing to keep in mind is that February only had 28 days, while in 2024 the month had 29 days. That extra day does not impact average occupancy levels or average daily room rates but it does impact the overall number of visitors entering the country that month.
He suggested that one tailwind Vancouver hoteliers might enjoy is the nationalistic sentiment Canadians are showing thanks to U.S. President Donald Trump's on-again-off-again tariffs, and threats of future tariffs. Many consumers are inspired to buy Canadian products, avoid travelling to the U.S. and to instead travel domestically.
Americans, Freitag said, do not feel the same political aversion when it comes to travelling to Canada. In fact, they may be more inspired to travel to Canada given that the Canadian dollar one year ago was trading at almost $0.74, while it is now trading at around US$0.70. They therefore get about six-per-cent more per dollar, given that their greenback now buys nearly 1.43 in Canadian dollars versus a year ago when one U.S. dollar bought only a bit more than 1.35 in Canadian currency.
A headwind for hoteliers, however, is that there is evidence Canadian, and particularly B.C. consumers, are pulling back on spending thanks to low confidence in the economy, and that this is pushing down small-business owners' confidence in their own enterprises' near and long-term future.
Tourism advocates have long urged governments to speed rezonings and otherwise encourage hotel development.
Many new hotel projects are underway. Last week, Bonnis Properties revealed the latest plan for a new hotel in the city, in the Granville entertainment district, above the Commodore Ballroom.
