Canada's hotel industry appeared to be inching closer toward pre-pandemic performance, but as the omicron variant emerged, the recovery index began to contract, said Laura Baxter, director of hospitality analytics for Canada at CoStar Group.
The industry achieved revenue per available room that was down 15.5% in December compared to pre-pandemic performance, due to two strong weeks of leisure demand and momentum in group demand. This is the closest the metric has been to the three-year average in 2019, she said.
Data from STR, CoStar's hospitality analytics firm, shows there was little disruption to performance over two weeks in December when leisure travel was strong for the holidays. During the first two weeks in January, the recovery index contracted as occupancy dropped to a range of 58% to 65% of 2019 levels. Baxter said that coincides with people returning to work.
"This is considerably lower than the 80% to 100% weekly index that had been achieved since November 2021. Rate recovery, however, remains more or less on track," she added.
Baxter said she expects a few more weeks of decelerated demand recovery until COVID-19 cases and hospitalizations drop off significantly, as seen in previous patterns.
Investment Activity
While the end of 2021 might have been overshadowed by virus variants, a few notable assets have traded or are in the process of trading.
In December, it was announced the 825-room Le Centre Montreal Sheraton Hotel in Montreal, Quebec, will be sold as part of a five-hotel portfolio to Toronto-based V.M. Hotel Acquisition Corporation, a new special purpose acquisition company, for 520 million Canadian dollars [$407 million]. The seller is Westmont Hospitality Group Canada.
Another deal includes the purchase of Deerhurst Resort in Huntsville, Ontario; Horseshoe Resort in Barrie; development lands at Blue Mountain Resort in the Blue Mountains; and Muskoka Bay Resort in Gravenhurst. Freed Hotels & Resorts/Resort Communities purchased this portfolio for 330 million Canadian dollars from Skyline Investments.
Industry Outlook
Looking ahead, Baxter said it's positive to hear Canada's federal government will continue to support the hospitality industry. The repayment deadline for the Canada Emergency Business Account program, which provides interest-free, partially forgivable loans, has been extended to December 2023.
Additionally, the government has committed to helping the most affected hotel businesses until May 2022 through a rent and wage subsidy program, she said.
For more of Baxter's analysis of the latest Canadian hotel performance and transactions data, watch the video above.