Colliers reports foreign investors strengthen Canada hotel performance levels

exterior of Westin Bayshore, Vancouver
The Westin Bayshore, Vancouver, British Columbia, Canada

Western Canada's hotel sector performance levels have surged due to growing interest in key markets, including Calgary and Vancouver, from both domestic and international investors. According to Colliers International's 2017 Canadian Hotel Investment Report, the stable political and legal environment has attracted foreign investors to Canada's lodging market and its steady flow of capital. 

Data show that Canada's market reported transaction values worth $4.1 billion in 2016 and is expected to exceed $3 billion in 2017. “2017 is shaping up to be another banner one for the hotel industry,” Robin McLuskie, VP, hotels for Colliers International, told Western Investor. “We expect foreign capital to keep flowing into our borders. We anticipate annualized supply growth to reach between 1.5 percent and 2 percent in the next two to three years. Hard-hit energy markets are rebounding, setting up these regions for increased activity. Plus the combination of Canada’s weak dollar and significant promotion around the country’s 150th anniversary should make 2017 a peak year for travel into Canada.”

Western Canada's ADR historically tends to be higher than that in Eastern Canada. However, limited supply and the oil recession in the Prairies have caused transactions to decrease in the West. Continued declines in operational performance in energy-linked markets including Calgary, Edmonton, Regina and Saskatoon impacted hotel valuations in 2016 although values are expected to stabilize in 2017. Still, Colliers International forecasts that ADR and RevPAR will increase in 2017 across all of Canada's major markets.

Foreign capital accounted for 67 percent of total transaction value at $2.75 billion in 2016. Canada's weak dollar is predicted to attract even more foreign investment, mainly from China.