Navigating Quebec’s Hotel Industry Future: Insights from the 2024 Quebec Hotel Investment Conference

The Quebec Hotel Investment Conference (QHIC), held on September 19th, 2024, at the InterContinental Montreal, brought together industry leaders to examine the critical issues shaping Quebec’s hotel market. A recurring theme was Quebec’s remarkable influx of capital investment, which is expected to drive the province’s hotel industry forward in both urban and regional markets. The event also addressed pressing operational challenges, including labor shortages and financing difficulties, especially for independent hoteliers.

Key Highlights of QHIC 2024:

1. Economic Opportunities and Infrastructure Investment
Quebec’s hotel market is benefiting from robust capital inflows, supported by a $28 billion infrastructure fund aimed at workforce development and hotel investment over the next five years. Although economic uncertainties linger, Quebec continues to be a major player in Canada’s tourism and hospitality sectors. This growth, particularly in infrastructure tied to green energy and electric vehicle battery production, is expected to strengthen Quebec’s hotel offerings.

For hotel developers, this presents an opportunity to expand or acquire properties, even in secondary markets. While much of the attention is focused on major urban areas like Montreal and Quebec City, regional hubs like the Laurentians and Eastern Townships are also seeing a surge in interest.

2. Labor and Regulatory Challenges
Labor shortages remain a critical issue in Quebec’s hospitality industry, with hotels struggling to attract skilled workers despite offering higher wages. Restrictions on temporary foreign workers have compounded the issue, prompting hoteliers to call for regulatory flexibility to meet staffing needs. In addition, specific operational regulations—such as lifeguard requirements at pools and no-show fees in restaurants—are under scrutiny, with industry leaders advocating for reforms to create a more supportive environment for hotel operators.

3. Tourism Growth and Portfolio Diversification
Quebec’s tourism industry is booming, with over 500 new hotel registrations in the past year, largely driven by legislative changes. A notable trend is the increasing integration of short-term rentals into traditional hotel portfolios. Hoteliers are diversifying their offerings to include both traditional stays and vacation rentals to meet evolving market demands. This blending of accommodation types reflects Quebec’s unique positioning in the Canadian hospitality landscape, which is seeing a growing preference for boutique, independent hotel experiences.

4. Investment Trends and Market Shifts
Investment panels at QHIC 2024 revealed an uptick in transaction volumes, with both domestic and international investors eyeing Quebec’s hotel market as a stable and high-growth opportunity. Investors from the U.S. and Asia, in particular, are attracted to Quebec’s combination of independent boutique hotels and larger branded properties. Consolidation is on the rise, with major players expanding their portfolios, particularly in Quebec’s regional markets. While branded hotels enjoy greater access to financing due to their perceived stability, independent properties are carving out a niche with unique offerings that resonate with local and international guests alike.

5. Succession Planning for Family-Owned Hotels
Succession planning in family-owned hotel businesses was a significant topic of discussion. Panelists emphasized the importance of clear communication, long-term planning, and external support to navigate leadership transitions effectively. Mentorship and exposure to different facets of hotel management are crucial in preparing the next generation of hoteliers. Many Quebec family-run hotels are exploring gradual integration of younger leaders to ensure a smooth transition, securing both family legacies and the financial viability of these properties.

6. Sustainability and Technological Integration
Sustainability and the adoption of cutting-edge technology are no longer optional but essential for hotels looking to stay competitive. Hoteliers are increasingly expected to adopt energy-efficient practices, not only to reduce their environmental footprint but to appeal to eco-conscious guests and align with government sustainability goals. Financing these green projects, however, remains a challenge, with calls for greater flexibility from lenders and government-backed programs. The rise of automation, AI-driven operations, and mobile check-ins were also discussed as key trends reshaping hotel operations and guest experiences.

7. Rising Renovation Costs and Brand Standards
Renovation costs have surged post-pandemic, with some panelists reporting material price hikes of up to 50 percent. Hotel renovations are now averaging between CAD 15,000 and CAD 75,000 per room, making cost management a top priority for hoteliers. Meeting the renovation demands of international hotel brands adds another layer of complexity, as operators must balance the need for modernization with the financial and operational feasibility of large-scale upgrades.

8. Impact of Renovations on Guest Experience
Renovating while maintaining guest satisfaction is a delicate balancing act. Poorly managed renovations can harm a hotel’s reputation, so phased renovations—where only part of the property is upgraded at any given time—have become a popular solution. However, this approach requires meticulous planning to ensure minimal guest disruption. Panelists advised hoteliers to focus on understanding guest expectations and market positioning before undertaking renovation projects.

9. Return on Investment (ROI) and Financial Strategy
Panelists stressed that hotel renovations should be driven by guest demand and market positioning rather than just brand mandates. Calculating ROI can be tricky, particularly for smaller upgrades. Successful renovations hinge on detailed planning, proper budgeting, and creative problem-solving, especially given the rising costs of materials and ongoing supply chain disruptions.

Looking Ahead
The future of Quebec’s hotel industry is bright, but hoteliers must remain agile in the face of regulatory challenges, labor shortages, and evolving market demands. Whether focusing on expansion within Quebec or eyeing opportunities in Western Canada and the Maritimes, the key to success lies in embracing innovation, sustainability, and collaboration across sectors.

The Quebec Hotel Investment Conference served as a critical platform for these discussions, providing valuable insights for industry leaders looking to shape the future of hospitality in the province.