Canadian hotel development planning efforts are surging as the hospitality market continues to rally from the effects of the COVID-19 pandemic, says a new report from Cushman & Wakefield.

“While there is an increase of new supply in the pipeline, the expansion is modest and is
much needed,” wrote author Brian Flood.

The heightened planning efforts, along with increased construction, have coincided with a “significant occupancy milestone.” Occupancy of 65.7% eclipsed the 2019 level.

Since 2020, the Canadian hospitality market has survived, and recovered from, the worst downturn in its history but faces new challenges tied to higher interest rates, a slower economic outlook, housing shortages and the impact of climate change. Floods and wildfires have caused hotel-room supply pressures.

The number of rooms in planning jumped to 36,497 in the fourth quarter of 2023, well above pre-pandemic levels. The quarter-over-quarter increase of 7,188 planned rooms exceeded the 6,761 intended-room rise between the first quarter of 2021 and the third quarter of 2023.

As of year-end 2023, Ontario accounted for the most rooms in the national pipeline, 57%, while B.C. was a distant second at 21%. City-wise, Toronto led with 18% of national pipeline rooms, followed by Vancouver at 11%.

The current national pipeline, in terms of both planning and construction, equals almost 10% of existing Canadian hotel supply.

The number of rooms in construction began to rise at mid-year 2023 after trending downward between mid-2021 to mid-2023.

“On a national level, this [overall hospitality market] recovery from COVID took just over three years which is remarkable given the extent of the fallout from the pandemic,” wrote Flood.

New hotel room openings fell to 3,237 in 2023 from 4,349 in 2021.

Photo: Germain Hotels