LE: Canada's construction pipeline grows 2% in Q3

According to the latest "Hotel Construction Pipeline Report" for Canada by Lodging Econometrics, the total construction pipeline in Canada stands at 263 hotels and 34,825 rooms, up 2 percent by projects and rooms year over year at the end of the third quarter.

At the Q3 close, projects under construction in Canada stand at 54 hotels and 6,984 rooms. Projects scheduled to start construction in the next 12 months are at 105 hotels and 14,270 rooms, a 24 percent increase by projects and a 37 percent increase in rooms year over year. Projects in the early planning stage show a slight 2 percent increase with 104 hotels and 13,571 rooms recorded.

The Bank of Canada recently announced another interest rate increase to bring its policy interest rate to 3.75 percent. Even with this additional increase, building activity remains above pre-pandemic levels as developers continue to move projects forward. In the third quarter, Canada had 20 new project announcements with 1,463 rooms.

Hotel renovations in Canada are up substantially year over year, with project counts three times larger than they were at this time last year. At the end of Q3, renovation totals stand at 48 hotels and 5,808 rooms and conversion totals stand at 56 hotels and 6,505 rooms. Combined, renovations and conversions reached a cyclical high by projects and closed the quarter at 104 hotels and 12,313 rooms.

Top Markets

Ontario is the most active province for pipeline projects in Canada during Q3 2022, with 148 hotels and 20,396 rooms. Next is British Columbia, at a record high by rooms, with 47 hotels and 7,239 rooms, and then Quebec with 20 hotels and 2,633 rooms. Together these three provinces account for 82 percent of the projects in Canada’s Pipeline.

At the Q3 close, Toronto had 62 hotels and 9,147 rooms underway, claiming 26 percent of all the rooms in the country’s total construction pipeline. Following distantly are Vancouver, British Columbia, with record project and room counts of 19 hotels and 2,694 rooms, and Montreal with 15 hotels and 2,140 rooms. These three cities alone account for 37 percent of the projects and 40 percent of the rooms in Canada’s total pipeline.

Top Brands

Marriott International leads the top hotel companies in Canada’s construction pipeline with a record high project count of 73 projects, accounting for 9,977 rooms, followed by Hilton with 64 hotels and 7,824 rooms and InterContinental Hotels & Resorts with 43 hotels and 4,426 rooms. These three companies make up 68 percent of the projects and 64 percent of rooms in the total construction pipeline.

The top brands in the pipeline are Hilton’s Hampton by Hilton brands with 25 hotels and 2,872 rooms, IHG’s Holiday Inn Express with 21 hotels and 2,257 rooms and Marriott’s Fairfield Inn with record high projects counts of 18 hotels and 1,678 rooms. Other noteworthy brands in the Canadian hotel construction pipeline are Home2 Suites by Hilton with 17 hotels and 1,821 rooms, TownePlace Suites by Marriott with 17 hotels and 1,811 rooms and Hyatt Place with 10 hotels and 1,612 rooms.

In the first three quarters of 2022, Canada had 19 new hotel openings, accounting for 2,015 rooms. LE’s forecast for new hotel openings predicts another 12 hotels and 1,778 rooms will open in the last quarter of 2022, bringing the year-end total to 31 new hotel openings with 3,793 rooms, for a 1.1 percent room supply increase. 2023 is forecast to see another 1.1 percent increase in room supply with 37 new hotels and 4,036 rooms expected to open, and in 2024 LE analysts anticipate that 42 new hotels, accounting for 4,042 rooms, will open and come online.