Incomes for hotels in British Columbia are trailing the entire nation. A snapshot taken during April 14-21 showed average revenue down 15.1 per cent, compared to a national average of -1.8 per cent. As a comparison, Alberta hotels posted a 9.5 per cent increase during the same week in revenue per available room (REVPAR), considered the most accurate measure of performance.
Vancouver is taking the worst hit. During a week that included the Vancouver Sun Run that attracted tens of thousands of participants, the average REVPAR of a city hotel plunged 17.5 per cent from a year earlier. The only region with a bigger decline in revenue was Prince Edward Island, which is still months away from its tourist season.
The survey, by North Vancouver-based HVS International, an industry consulting firm, shows the average REVPAR for Vancouver hotels was $87.34, while the average room rate was down 7.9 per cent, to $132.09 per night.
The city's poor performance, tied to lower tourist and convention traffic, is expected to cool new hotel construction.
"No one in their right mind would develop stand-alone hotels right now [in Vancouver]," said Zack Bhatia, vice-president of Mayfair Hotels and Resorts which owns 12 hotels in B.C., including seven in downtown Vancouver.
Still, a separate report from Colliers International is bullish on the national outlook for the hotel industry. According to Colliers' 2013 Canadian Hotel Investment Report, sales of Canadian hotels hit a record value of $1.2 billion in 2012 and "this year is forecast to top that figure."
Colliers picks Calgary and Edmonton as the prime markets for hotel investors this year.
Bhatia said buying existing hotels in Vancouver is likely less costly than building new. "Land is going for $200 per square foot in downtown Vancouver. By the time you do the construction costs, you could buy existing hotels cheaper," he said.
See the June issue of Western Investor for a report on the hotel and motel market across Western Canada.
