In February, Group Demand Fuels Hotel Room Rates Across Canada

In February 2024, Canada’s hotel industry experienced a third consecutive month of declining occupancy rates, yet it saw a continued rise in Average Daily Rate (ADR), according to data from CoStar.

Notably, the growth in Group ADR, soaring by 7.9 percent, stood out as the most robust among the segments, driving overall ADR growth. The occupancy rate averaged 58 percent, marking a slight decrease of 1.6 percent compared to the previous year.

Despite this decline, the ADR surged to $181.55, reflecting a notable increase of 3.8 percent, and Revenue Per Available Room (RevPAR) reached $105.37, up by 2.2 percent. Manitoba boasted the highest occupancy level in February 2024, reaching 69.8 percent, although it saw a slight decline of 0.5 percent from 2023.

Among major markets, Vancouver held the highest occupancy rate at 73.5 percent, albeit down by 1.4 percent compared to February 2023. Conversely, Prince Edward Island (P.E.I.) recorded the lowest occupancy among provinces, plummeting to 38.6 percent, marking a significant decrease of 38.1 percent from the previous year, attributed to the absence of the Canada Winter Games.

In Edmonton, the market reported the lowest occupancy rate at 53.3 percent, showing a 4.6 percent increase. Laura Baxter, Director of Hospitality Analytics for Canada at CoStar Group, noted that while both transient and group occupancy declined, weekday occupancy showed resilience compared to weekends. She highlighted the robust growth in group rates, indicating the segment’s increasing profitability and resurgence to pre-pandemic levels.

Additionally, Baxter mentioned that despite the slight slowdown in room-rate growth compared to January, it still outpaced inflation, albeit with a narrowing gap between the two measures.

Furthermore, she emphasized the minimal supply pressure across most markets, with new openings expected to decline by approximately 30 percent compared to the 10-year average in 2024.