Robust development continues in prairie province cities of Regina, Saskatoon


Like most of western Canada, the Regina and Saskatoon, Saskatchewan, hotel markets have experienced downturns in recent months. Slowdowns in the energy and mining industries have reduced demand in both cities and throughout the province.

According to data from HVS, through August revenue per available room throughout Saskatchewan was down 8.5 percent from the previous year. Hotels in Regina, in the southern part of the province and part of the Bakken oil and natural gas deposits, saw RevPAR slip 13.5 percent in the first eight months of the year. In Saskatoon, RevPAR fell 8 percent.

“The decreases are a combination of two things,” said Carrie Russell, managing director-Canada for HVS. “Demand is down between 2.5 and 3 percent in both markets, and supply is way up. The markets had been performing pretty well, but then a lot of new hotels got built because it is easy to find land and it was fairly inexpensive compared to markets like Calgary or Edmonton.”

With additional supply scheduled to come online and continued volatility in the energy markets, Russell believes the province’s hotel will see three years of RevPAR decline, although the decreases in the next two years shouldn’t be as dramatic as they have been in 2015.

“The challenge is there are a lot of tired, old and independent properties in these markets, so the new supply coming in is doing relatively well,” Russell said. “The properties that are unbranded or haven’t been renovated are suffering.”

Challenges and opportunities

While energy is the key industry in Saskatchewan, other business sectors drive hotel demand.

“Regina as the provincial capital generates a lot of demand from the government, and there are a lot of corporations headquartered there, such as in the hydro and insurance businesses,” said Jason Wight, an HVS vice president. “Regina is also the headquarters of the Royal Canadian Mounted Police and it’s where its training is done. Also, in Saskatchewan agriculture is a main industry, and further north is uranium mining.”

Despite consistent demand drivers, the hotel industry faces a few challenges, said Wight.

“Labor is a big one, as everyone is competing with the construction and oil businesses to get workers,” he said. “Access to the markets is also a challenge. Flights to Regina and Saskatoon are fairly limited, and without the hotel space in other cities, they have trouble competing for convention business, even on a regional level.”

The pipeline

The hotel development pipeline remains robust in Regina, Saskatoon and throughout Saskatchewan. At the end of the second quarter, 20 hotels with 2,089 rooms are in the provincial pipeline. All but one hotel in the pipeline is either under construction or will go under construction in the next 12 months. Openings are nearly evenly scheduled for the next few years: six hotels open this year, eight in 2016 and eight more in 2017 and ’18.

The number of rooms under development in Saskatchewan represents 15.8 percent of the current room supply in the province.

Most of the development in the province (14 of 20 hotels) is in either Regina or Saskatoon. Both Regina and Saskatoon have seven hotels under development. Four are scheduled to open this year in Saskatoon, and in 2016 five will open in Regina.

Work recently started on the Capital Pointe project in Regina that will include a 12-story hotel and 26 floors of condominium units. The project, which is being developed by Fortress Real Development, is scheduled to open in 2018.

The historic Hotel Saskatchewan in downtown Regina was recently sold and rebranded. Toronto-based InnVest Real Estate Investment Trust bought the 224-room hotel for $37 million from Temple Hotels. The new owner said it will rebrand the property from Radisson to Marriott later this year.

In Saskatoon, a proposed dual-branded hotel near the University of Saskatchewan has been delayed over a leasing agreement between the university and the city of Saskatoon. If completed, the 10-story hotel will include a 125-room Holiday Inn Express and an 85-unit Staybridge Suites.