PKF CONSULTING AND CBRE HOTELS OUTLOOK For the Canadian Lodging Sector 2015/2016 September 15, 2015
On pace to exceed original forecasts FIFA / PanAM games impacts Month of June was record setting across the country Prospects for overall travel growth in 2016 TRANSITION FROM RESOURCE MARKET
Economic and Travel Outlooks
National Economic Outlook - 2015/16 1.95 1.85 1.75 1.65 1.55 1.45 $1.58 $1.54 $1.59 $1.63 $1.66 $1.70 Source: Statistics Canada, Conference Board of Canada, Canadian Outlook Summer 2015, Scotiabank Group Global Forecast Update 2015; CIBC World Markets Monthly FX Outlook, 2015; RBC Economic and Financial Market Outlook 2015 Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com $1.74 $1.77 $1.80 2008 2009 2010 2011 2012 2013 2014 2015f 2016p Real GDP 2.4% 1.4% % Change 2.2% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% % Change
National Travel Outlook 2015/16 Overnight Travel 2014 Act ual 2015 Forecast 2016 Projection Business t ravel dom est ic 2.5% 0.3% 2.7% Pleasure travel domestic 2.4% 2.7% 2.2% Total domestic travel 2.0% 2.1% 2.1% U.S. Travel 1.1% 7.5% 3.2% Overseas travel 9.3% 5.0% 4.1% Total overnight travel 2.2% 2.7% 2.3% National accommodation demand growth 3.2% 1.0% 2.4% Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2015 Forecast Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
Regional Travel Outlooks - % Growth Western Canada Central Canada Atlantic Canada 2.4% 2.2% 2.7% 3.0% 1.9% 2.6% 1.7% 1.9% 1.6% 2015f 2016f 2017f 2015f 2016f 2017f 2015f 2016f 2017f Source: Canadian Tourism Research Institute, Conference Board of Canada, Preliminary Fall 2015 Forecast Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
National Market & Financial Outlooks 2015/2016
National Hotel Investment Volume Price per room 2015 YE Forecast
Buyer Profile Private Investors Public/ REITS Foreign Capital
National Supply & Demand Outlook Supply & Demand Growth National Occupancy 0.6% 1.5% 1.3% 3.2% 1.0% 2.4% 2014 Actual 64% 2015 Forecast 64% 2016 Projection 65% 2014 2015F 2016P 2014 2015F 2016P Supply Demand Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
National ADR, RevPar & Bottom Line Outlook National ADR Growth 2014 Actual 3.7% 2015 Forecast 3.9% 2016 Projection 3.5% National RevPar Growth 2014 Actual 6.3% 2015 Forecast 3.4% 2016 Projection 4.7% Adjusted Net Operating Income /Available Room ($000's) 13.5% $10.8 6.9% $11.6 8.1% $12.5 2014 2015F 2016P Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
Atlantic Canada Hotel Investment
Atlantic Canada Supply & Demand Outlook Supply & Demand Growth Occupancy 2.3% 2.1% 2.0% 2014 Actual 58% 1.2% 0.6% 2015 Forecast 58% 2016 Projection 59% 0.0% 2014 2015F 2016P 2014 2015F 2016P Supply Demand Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
Atlantic Canada ADR, RevPar & Bottom Line Outlook Atlantic Canada ADR Growth 2014 Actual 3.1% 2015 Forecast 3.0% 2016 Projection 3.0% Atlantic Canada RevPar Growth 2014 Actual 2.9% 2015 Forecast 1.8% 2016 Projection 4.4% Adjusted Net Operating Income /Available Room ($000's) 0.1% $7.1 5.4% $7.5 8.1% $8.1 2014 2015F 2016P Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
SOME GROWTH EXPECTED IN 2015 & 2016
Western Canada Hotel Investment
Western Canada Supply & Demand Outlook Supply & Demand Growth Occupancy 1.6% 2.1% 2.0% 3.4% 3.0% 2014 Actual 65% 2015 Forecast 64% 2016 Projection 64% 0.0% 2014 2015F 2016P 2014 2015F 2016P Supply Demand Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
Western Canada ADR, RevPar & Bottom Line Outlook Western Canada ADR Growth 2014 Actual 4.0% 2015 Forecast 3.0% 2016 Projection 3.0% Western Canada RevPar Growth 2014 Actual 5.7% 2015 Forecast 0.9% 2016 Projection 4.1% Adjusted Net Operating Income /Available Room ($000's) 11.3% -0.2% 6.0% $15.4 $14.5 $14.5 2014 2015F 2016P Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
OVERALL NUMBERS COULDN T BE MORE MISLEADING
Central Canada Hotel Investment
Central Canada Supply & Demand Outlook Supply & Demand Growth Occupancy 0.9% 0.7% 2.5% 2.0% 2.0% 2014 Actual 64% 2015 Forecast 65% 2016 Projection 66% -0.5% 2014 2015F 2016P 2014 2015F 2016P Supply Demand Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
Central Canada ADR, RevPar & Bottom Line Outlook Central Canada ADR Growth 2014 Actual 3.2% 2015 Forecast 5.0% 2016 Projection 4.0% Central Canada RevPar Growth 2014 Actual 6.4% 2015 Forecast 6.1% 2016 Projection 5.3% Adjusted Net Operating Income /Available Room ($000's) 18.1% $8.6 16.7% 10.8% $10.1 $11.1 2014 2015F 2016P Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
CITY WIDE OCCUPANCY IN TORONTO, MONTREAL AND OTTAWA ALL OVER 70%
Major Market Outlooks
Major Market* Outlooks RevPar Projection - 2016 2016 RevPAR Ranking 8.0% 4.0% Vancouver Toronto Halifax Niagara Falls Ottawa Montreal Quebec City Winnipeg St. John s Saskatoon Calgary Edmonton Regina Vancouver $126 Ottawa $116 Montreal $114 Toronto $107 St. John s $107 Quebec City $105 0.0% -4.0% Calgary $104 Saskatoon $99 Niagara Falls $97-8.0% Halifax $87-12.0% > 5% RevPar Growth 4-5% RevPar Growth < 1% RevPar Growth Edmonton $83 Winnipeg $81 Regina $73 * Major Markets refer to Greater Metro Areas Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
National Financial Outlook Beyond 2015
National Financial Outlook Beyond 2015 Adjusted Net Operating Income Per Available Room ($000's) $12.1 40% (26%) $10.5 $7.5 $8.9 $14.7 12% $8.4 (1%) 14% $10.1 $14.5 (11%) $7.5 30% 40% $14.1 $18.9 2000 2008 2015 2020 40% $10.5 Central Canada Western Canada Atlantic NOTE: Adjusted Net Operating Income is defined as income after property taxes, insurance, management fees, franchise fees, and capital reserves; but before rent, interest, income taxes, depreciation and amortization. Source: PKF Consulting Inc., a CBRE Company with reproduction and use of information subject to Disclaimer and Restrictions as detailed at www.pkfcanada.com
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