GTHA PKF OUTLOOK FOR THE CANADIAN LODGING SECTOR 2014/2015 September 16, 2014 PKF Consulting Canada Economic and Travel Outlooks PKF Consulting Canada National Economic Outlook - 2014/15 2.5% 2.3% $1.80 2.3% $1.75 4.0% $1.78 3.0% $1.70 2.0% $1.70 $1.65 1.0% $1.66 $1.63 $1.60 0.0% % Change Real GDP (Trillions) $1.74 Real GDP % Change $1.59 $1.55 -1.0% $1.58 $1.54 $1.50 -2.0% $1.45 -3.0% 2008 2009 2010 2011 2012 2013 2014f 2015p Source: Statistics Canada, Conference Board of Canada, Metropolitan Outlook Fall 2014, Scotiabank Group – Global Forecast Update 2014; CIBC World Markets – Monthly FX Outlook,2014; RBC – Economic and Financial Market Outlook – 2014 Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com National Travel Outlook 2014/15 2013 Actual 2014 Forecast 2015 Projection Business Travel Domestic 1.6% 2.0% 2.7% Pleasure Travel Domestic 0.9% 2.2% 2.9% Total Domestic Travel 1.0% 1.7% 2.5% U.S. Travel 1.2% 1.6% 3.5% Overseas Travel 2.5% 5.4% 4.1% TOTAL OVERNIGHT TRAVEL 1.0% 1.8% 2.7% National Accommodation Demand Growth 2.3% 2.7% 2.7% Overnight Travel Source: Canadian Tourism Research Institute, Conference Board of Canada, Preliminary Fall 2014 Forecast Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Regional Travel Outlooks - % Growth 2015p Western Canada 3.1% 2014f 2.8% 2013 0.0% 2.7% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2.5% 3.0% 3.5% 2.5% 3.0% 3.5% 2015p Central Canada 2.5% 2014f 2013 0.0% 1.4% 0.4% 0.5% 1.0% 1.5% 2015p Atlantic Canada 1.8% 2014f 1.4% 2013 0.0% 2.0% 1.2% 0.5% 1.0% 1.5% 2.0% Source: Canadian Tourism Research Institute, Conference Board of Canada, Preliminary Fall 2014 Forecast Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com National Outlook 2014/2015 PKF Consulting Canada National Supply & Demand Outlook Supply & Demand Growth 3.0% 2.7% 2.7% Percent Growth 2.5% 2.3% National Occupancy 2.0% 1.5% 1.5% 1.0% 0.6% 2013 Actual 63% 2014 Forecast 64% 2015 Projection 65% 0.7% 0.5% 0.0% 2013 2014f 2015p Supply 2013 2014f 2015p Demand Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com National ADR, RevPar & Bottom Line Outlook National ADR Growth National RevPar Growth 2.4% 2013 Actual 4.2% 2014 Forecast 2.5% 2014 Forecast 4.6% 2015 Projection 2.5% 2015 Projection 3.7% Adjusted Net Operating Income per Available Room ($000's) 2013 Actual $11.0 ANOI Growth $10.5 7.6% $10.0 $10.3 5.1% $10.8 5.6% $9.5 $9.6 $9.0 $8.5 $8.0 2013 2014f 2015p Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Regional Market and Financial Outlooks PKF Consulting Canada Regional RevPar Outlook 3.8% $95 $90 $92 $95 $85 $80 2014 RevPar Growth 3.6% $88 $88 Western 4.5% Central 5.1% Atlantic 0.7% 2.7% $85 $75 2015 RevPar Growth $81 $70 $65 $70 $71 $72 Western 3.8% Central 3.6% Atlantic 2.7% $60 2013 2014f 2015p $55 $50 West Central Atlantic Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Regional Bottom Line Outlook 5.4% 2014 ANOI Growth Adjusted Net Operating Income per Available Room ($000's) $14.0 $14.0 $14.7 $12.0 $10.0 $13.0 Western 7.1% Central 9.9% Atlantic (3.4%) 4.9% 2.6% $8.0 $6.0 $8.0 $7.3 $4.0 $8.4 $7.0 $7.1 $6.9 $2.0 2015 ANOI Growth Western 5.4% Central 4.9% Atlantic 2.6% 2013 2014f 2015p $0.0 West Central Atlantic Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Major Market Outlooks PKF Consulting Canada Major Market Outlooks* RevPar Projection - 2015 2 - 4% RevPar Growth St. John’s Calgary Winnipeg Edmonton Halifax Quebec City Montreal Ottawa Vancouver Toronto Niagara Falls Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Saskatoon 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% < 2% RevPar Growth Regina > 5% RevPar Growth 2015 RevPAR Ranking Calgary Vancouver St. John’s Ottawa Montreal Toronto Saskatoon Edmonton Quebec City Niagara Falls Regina Halifax Winnipeg $119 $107 $107 $103 $102 $100 $99 $95 $92 $88 $87 $81 $76 * ‘Major Markets’ refer to Greater Metro Areas Economic and Travel Outlook for the GTA PKF Consulting Canada GTA Economic Indicators 2013 Actual 2014 Forecast 2015 Projection Manufacturing Employment (2.3%) 3.4% 1.7% Construction Employment 13.3% (4.3%) 4.9% Service Sector Employment 3.8% 2.4% 2.4% GDP Growth 1.8% 2.7% 2.9% Source: Conference Board of Canada Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com GTA Travel Indicators 2013 Estimate 2014 Forecast 2015 Projection Business Travel Overnight Domestic 1.5% 2.4% 3.2% Pleasure Travel Overnight Domestic 1.5% 2.0% 6.7% U.S. Overnight Travel 2.3% 1.5% 6.0% Overseas Overnight Travel 3.2% 5.8% 5.9% TOTAL OVERNIGHT TRAVEL 1.7% 2.0% 4.1% DEMAND GROWTH 3.1% 3.0% 3.6% Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall Preliminary 2014 Forecast Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Major Conventions 2015 Conventions* Occupied Room Nights Teachers of English to Speakers of Other Languages (March) 11,000 International Society for Magnetic Resonance in Medicine (May/June) 15,050 American Psychological Association (August) 16,550 International Society on Thrombosis and Haemostasis (June) 30,100 American Psychiatric Association (May) 57,430 • Major conventions are expected to generate an additional 45,000 Occupied Room Nights in 2015 over 2014 (175,000 ORN versus 130,000) *Only lists conventions of 11,000+ ORN Source: Tourism Toronto Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Implications of the Pan Am & ParaPan Games 2015 PKF Consulting Canada Pan Am/Parapan Games 2015 *Pan Am/Parapan Games 2015:July 10-26 and August 7-14 • • • • • 20 + 9 Competition Days (Pan Am + Parapan Am) • 23,000+ Games Family Attendees 500+ Pan Am/Parapan Am Games Sessions 1,400,000+ Pan Am/Parapan Am Games Ticketed Spectators 33 Games Competition and Ceremony Venues 17,500 Pan Am Games Volunteers / 13,000 Parapan Am Games Volunteers Source: Let’s Go: Toronto 2015 Pan Am/Parapan Am Games Strategic Framework for Transportation Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Pan Am/Parapan Games – Venue Grouping Source: Ontario Ministry for the Pan Am/Parapan Games 2015 Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Impact of the Pan Am Games • • • • 55,000 room nights currently committed to delegates/teams • PKF estimates reflect 10% of attendees requiring accommodation (140,000 visitors generating 70,000 occupied room nights at double occupancy) • Combined with 55,000 room nights committed to delegates, this represents 125,000 occupied room nights resulting in a 0.7% potential impact on annual occupancy city-wide Significant component of 1.4 million attendees will be local/regional Direct impact on properties will be tied to the location of venues There is sufficient capacity across the GTA to accommodate additional spectator demand Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com GTA Overall & Sub-Markets Market & Financial Outlooks PKF Consulting Canada Room Supply and Demand (000s) GTA Accommodation Supply & Demand 18 16 14 12 10 8 6 4 2 0 2010 2011 2012 Supply 2013 2014 (f) Demand Note: Room supply is year round supply greater than 29 rooms. Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com 2015 (p) Market Outlook – GTA Overall TOTAL GTA Rooms Occupancy ADR RevPar %chg Supply Demand ADR RevPar 2012 2013 2014F 2015P 43,256 66% $130 $86 43,548 68% $134 $91 43,775 70% $138 $96 44,757 71% $142 $100 2012 2013 2014F 2015P 1.3% 2.2% 1.5% 2.4% 0.7% 3.1% 2.7% 5.2% 0.5% 3.0% 2.9% 5.4% 2.2% 3.6% 3.4% 4.8% Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Market Outlook – Downtown Toronto DOWNTOWN Rooms Occupancy ADR RevPar %chg Supply Demand ADR RevPar 2012 2013 2014F 2015P 16,841 74% $161 $119 16,751 74% $168 $125 16,851 74% $175 $129 17,385 74% $182 $135 2012 2013 2014F 2015P (0.2%) 1.4% 1.5% 3.2% (0.5%) (0.1%) 4.1% 4.5% 0.6% 0.0% 4.0% 3.4% 3.2% 3.5% 4.0% 4.3% Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Market Outlook – GTA Airport AIRPORT Rooms Occupancy ADR Revpar %chg Supply Demand ADR Revpar 2012 2013 2014F 2015P 7,973 69% $108 $74 8,121 71% $107 $76 8,121 73% $110 $81 8,121 76% $114 $86 2012 2013 2014F 2015P 1.2% 3.2% 1.4% 3.4% 1.9% 5.4% (1.0%) 2.5% 0.0% 3.0% 3.0% 6.1% 0.0% 3.5% 3.0% 6.6% Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Market Outlook – GTA West WEST Rooms Occupancy ADR Revpar %chg Supply Demand ADR Revpar 2012 2013 2014F 2015P 8,428 60% $104 $63 8,529 63% $106 $67 8,408 66% $110 $73 8,580 67% $113 $76 2012 2013 2014F 2015P 2.4% 1.2% 1.3% 0.1% 1.2% 5.4% 2.4% 6.6% (1.4%) 4.0% 3.0% 8.7% 2.0% 3.5% 3.0% 4.5% Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Market Outlook – GTA East/North EAST/NORTH Rooms Occupancy ADR RevPar %chg Supply Demand ADR RevPar 2012 2013 2014F 2015P 10,014 58% $110 $64 10,147 61% $115 $70 10,395 64% $117 $75 10,671 65% $120 $78 2012 2013 2014F 2015P 3.1% 3.7% 2.2% 2.8% 1.3% 6.2% 3.7% 8.7% 2.4% 8.0% 2.5% 8.1% 2.7% 4.0% 2.5% 3.8% Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Financial Outlook – GTA $14 $12 $10.4 $8.4 $10.8 $13.4 $9.6 $8.0 $10.3 $12.6 $9.1 $7.3 $8.7 $4 $7.2 $6 $9.6 $12.6 $8 $14.6 $10 $9.1 Net Income Per Available Room ($000's) $16 $2 $0 2012 (a) National 2013 (a) Central Canada 2014 (f) GTA 2015 (p) Downtown Toronto Source: PKF Consulting Inc. with reproduction and use of information subject to PKF Disclaimer and Restrictions as detailed at www.pkfcanada.com Concluding Remarks PKF Consulting Canada PKF Consulting Canada NATIONAL DIRECTORS David Larone Brian Stanford Fran Hohol PKF TORONTO Erin O’Brien Rebecca Godfrey Nicole Nguyen Robert Sedore Gregory Hives Lauren Arnold JoAnne Orr PKF Consulting Canada PKF VANCOUVER David Ferguson Kirstin Hallett Trevor Scott Carol Lopes PKF ASSOCIATE Steve Rayner AACI www.pkfcanada.com
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