Covid-19 preliminary assessment of the impacts on the ...€¦ · covid-19 preliminary assessment...

COVID-19PRELIMINARY ASSESSMENT OF THE IMPACTS ON THE CANADIAN ACCOMMODATION SECTORMay 2020

2 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

DISCLAIMER

All information contained in this document as well as in CBRE Limited (“CBRE”) publications, or otherwise provided by CBRE isdesigned as a reference and a management tool for the internal use of companies and agencies involved in the travel and tourism industry. Reproduction and quotation in documents and matters relating to provision of third party consulting advice,business planning, solicitation of public funds, debt and equity financing, litigation, property tax or other legal and financial matters is NOT PERMITTED without the written permission of CBRE. Quotation and reproduction of this material is permitted otherwise ONLY if credited to CBRE and referencing our disclaimer as follows: Source: CBRE Limited with reproduction and use of information subject to CBRE Limited Disclaimer / Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

Users of this information are advised that CBRE Limited does not represent the information contained herein to be definitive or all-inclusive. CBRE Limited believes the information to be reliable, but is not responsible for errors or omissions.

3 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

PRESENTERS

DAVID LARONE, ISHCSENIOR MANAGING DIRECTOR, CBRE HOTELS

NICOLE NGUYEN, CANDIDATE MEMBER AICDIRECTOR, CBRE HOTELS

BRIAN STANFORD, CMC, ISHC, FRICSSENIOR MANAGING DIRECTOR, CBRE HOTELS

T + 1 647 943 3742EMAIL: DAVID.LARONE@CBRE.COM

T+ 1 647 943 3745EMAIL: NICOLE.NGUYEN@CBRE.COM

T + 1 647 943 3741EMAIL: BRIAN.STANFORD@CBRE.COM

4 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

CBRE HOTELS – CANADA

CURRENT COVID-19 SITUATION

6 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

GLOBAL PERSPECTIVE

SEMI-EASING LOCKDOWN GRADUAL OPENING RECOVERYLOCKDOWN

China

France NetherlandsUSA

SpainAustralia

Austria DenmarkCzechNorway

Iran

Germany ItalyPortugalBelgiumSwitzerlandCanadaIndia

NO LOCKDOWN• South Korea• Taiwan• Japan

UKTurkey

Singapore

BrazilRussia

GDP-lead indicator and lockdown stage comparison (May 4)

Source: CBRE Hotels Research

7 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

CANADIAN PERSPECTIVE

OntarioQuebec

British ColumbiaNova Scotia

PEINew BrunswickSaskatchewanNewfoundlandManitoba

Alberta

No Plans in Place:• Nunavut• Northwest Territories• Yukon

SEMI-EASING LOCKDOWN GRADUAL OPENING RECOVERYLOCKDOWN

Canadian Provincial lockdown stage comparison (May 6)

ECONOMIC OUTLOOKS

9 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CBRE ECONOMIC SITUATION

-4.9 -4.8 -4.7-5.4 -6.1

-8.1-6.8

6.1

3.95.2 5.0

6.2

4.4

9.5

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

USA Japan Germany UK France Italy Canada

Real

GD

P G

row

th (%

)

GDP Growth Forecasts G7 Economies 2020 2021

Source: CBRE House-View, April 2020.

10 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CURRENT ECONOMIC SITUATION

-4.8

-4.9

-6.9

-7.5

-9.1

-6.0

-10.8

-6.2

4.0

3.9

6.8

7.3

6.5

6.0

9.3

4.2

National Bank of Canada

RBC

CIBC

TD

Scotiabank

BMO

Deloitte

IMF

GDP Forecast

2020 2021

8.3

10.0

10.3

9.4

9.3

8.5

7.4

7.5

7.4

7.6

8.4

6.0

8.8

7.0

6.7

7.2

National Bank of Canada

RBC

CIBC

TD

Scotiabank

BMO

Deloitte

IMF

Unemployment Forecast

2021 2020

Compiled by CBRE Hotels, 2020

11 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CURRENT ECONOMIC SITUATION

$227 BStimulus (~10% of GDP)

$150 B Liquidity or Loan Measures

~2.5xLarger than 2009 Financial Crisis Response

$77 BDirect Stimulus

RECENT HISTORY

13 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

2015 TO 2019

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

35%

40%

45%

50%

55%

60%

65%

70%

2015 2016 2017 2018 2019

RevP

AR

Occ

upan

cy

National Accommodation Market Occupancy & RevPAR2015-2019

RevPAR Occupancy

14 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

2015 TO 2019

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

2015 2016 2017 2018 2019

National ANOI Per Room

15 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

OUR ORIGINAL 2020 OUTLOOK

NATIONAL 2020 Projections

Rooms 465,006

Occupancy 66%

ADR $171

RevPAR $113

% Change

Supply 1.9%

Demand 1.8%

ADR 3.0%

RevPAR 2.8%

HIGHLIGHTS:

• Supply was expected to grow at record levels

• With demand expected to be generally in balance with supply occupancy was expected to be relatively flat

• ADR growth was expected to be below the five year average

• With moderate ADR growth and occupancy holding flat RevPAR growth was expected to be less than 3%

16 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

TRAVEL DATA

12%

67%

14%7%

CANADIAN TRAVEL BREAKDOWN

Domestic (Business) Domestic (Pleasure) US OVERSEAS

Source: Conference Board of Canada

CURRENT MARKET PERFORMANCE

18 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

2020 YTD NATIONAL PERFORMANCE

Source: CBRE Hotels

2020 Jan Feb Mar YTD March

Occupancy 50% 59% 32% 47%

ADR $147 $150 $141 $147

RevPAR $74 $88 $45 $69

2019 Jan Feb Mar YTD March

Occupancy 51% 59% 60% 57%

ADR $148 $150 $148 $149

RevPAR $75 $88 $89 $84

19 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

2020 YTD NATIONAL PERFORMANCE

Source: STR

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

0%

10%

20%

30%

40%

50%

60%

70%

80%COVID-19 NATIONAL ACCOMODATION MARKET IMPACT

Occ 2020

Occ 2019

ADR 2020

ADR 2019

RevPAR 2020

RevPAR 2019

20 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CANADIAN/US TREND LINES

0%

10%

20%

30%

40%

50%

60%

70%

80%

29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr 11-Apr 18-Apr 25-Apr 2-May

Canada/US Weekly Occupancy Performance2019/2020

Canada 2019

Canada 2020

US 2019

US 2020

Source: STR

21 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

0%

10%

20%

30%

40%

50%

60%

70%

80%

Atlantic Central Prairies Western National

Regional Occupancy Week Ending May 2nd

2019 2020

REGIONAL OCCUPANCY PERFORMANCE

Source: STR

22 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Edmonton Calgary Montreal Ottawa Toronto Vancouver National

Major Market Occupancy Week Ending May 2nd

2019 2020

MAJOR MARKET OCCUPANCY PERFORMANCE

Source: STR

23 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Urban Suburban Airport Interstate Resort SmallMetro/Town

National

Occupancy by Location Week of May 2nd

2019 2020

PROPERTY LOCATION OCCUPANCY PERFORMANCE

Source: STR

IMPACT OF HISTORIC EVENTS

25 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

120,000,000

45%

50%

55%

60%

65%

70%

National Accomodation Market Occupancy & Demand1998-2019

Occupied Room Nights Occupancy

SARS Epidemic

Great Financial

Crisis

9/11 Terrorist Attacks

IMPACT OF HISTORIC EVENTS

Source: CBRE Hotels

26 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

National Accomodation Market ADR & RevPAR Performance1998-2019

ADR RevPAR

9/11 Terrorist Attacks

SARS Epidemic

Great Financial

Crisis

IMPACT OF HISTORIC EVENTS

27 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

IMPACT OF HISTORIC EVENTS

Source: CBRE Hotels

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

National ANOI Per Room

SARS Epidemic

9/11 Terrorist Attacks

Great Financial

Crisis

COMING OUT OF COVID-19

29 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

RECOVERY INFLUENCES

Travel Restrictions

Industry Operational

Shifts

Economic Recovery

Longer Term Social

Distancing Requirements

Vaccine Timing &

Availability

30 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CANADIAN RECOVERY OUTLOOK

Source: CBRE Hotels

CBRE Original Canadian Forecasts 1/1/2020

Occ ADR RevPAR Supply Demand Occ ADR RevPAR

2019 65.1% $163.52 $106.52 1.8% 0.2% -1.1% 0.8% -0.8%

2020 65.3% $167.44 $109.39 1.9% 2.5% 0.2% 2.4% 2.7%

Canadian Forecasts Based on CBRE US Forecasts 5/5/2020

Occ ADR RevPAR Supply Demand Occ ADR RevPAR

2020 38.2% $138.99 $53.15 1.9% -40.0% -27.1% -15.0% -50.1%

2021 57.0% $152.89 $87.09 0.7% 50.0% 18.7% 10.0% 63.8%

2022 63.5% $159.01 $100.94 0.5% 12.0% 6.5% 4.0% 15.9%

2023 65.1% $163.78 $106.55 0.5% 3.0% 1.6% 3.0% 5.6%

2024 65.1% $167.87 $109.22 1.5% 1.5% 0.0% 2.5% 2.5%

2025 65.1% $172.07 $111.95 1.5% 1.5% 0.0% 2.5% 2.5%

31 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CANADIAN RECOVERY OUTLOOK

Source: CBRE Hotels

10%

20%

30%

40%

50%

60%

70%

80%

Canadian Occupancy Forecast Based on CBRE US Forecasts 5/5/2020

2019 Actual Occupancy CBRE Occupancy Forecast

32 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CANADIAN RECOVERY OUTLOOK

Source: CBRE Hotels

95

105

115

125

135

145

155

165

175

185

Canadian ADR Forecast Based on CBRE US Forecasts 5/5/2020

"2019 Actual ADR" "CBRE ADR Forecast"

33 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE CANADIAN RECOVERY OUTLOOK

Source: CBRE Hotels

10

30

50

70

90

110

130

150

Canadian RevPAR Forecast Based on CBRE US Forecasts 5/5/2020

"2019 Actual RevPAR" "CBRE RevPAR Forecast"

34 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE RECOVERY: SEGMENTATION IMPLICATIONS

Local Leisure

Medium-LargeGroup

Crew

Local/Regional

Corporate

National/Global

CorporateSocial

Catering

Small Group

Tour Groups

Impact/Survival Recovery/New Normal

Government

Limited Service

Focused Service/Extended Stay

Full Service/ Resort

International Leisure

Third-Party/Discount

Special Purpose

35 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

THE RECOVERY: PHASING

Impact & Short Term Relief Survival Recovery The New

Normal

CBRE HOTELS VALUATION & ADVISORY SERVICES | www.cbre.ca/vas-hotels

TORONTO/NATIONALBrian StanfordSenior Managing Director647.943.3741 | brian.stanford@cbre.com

VANCOUVERDavid FergusonDirector778.372.1941 | david.ferguson@cbre.com

TOURISM & LEISURE GROUPFran HoholSeniorDirector647.943.3743 | fran.hohol@cbre.com

David LaroneSenior Managing Director647.943.3742 | david.larone@cbre.com

Kirstin HallettDirector778.372.1942 | kirstin.hallett@cbre.com

Rebecca GodfreyDirector647.943.3744 | rebecca.godfrey@cbre.com

Nicole NguyenDirector647.943.3745 | nicole.nguyen@cbre.com

Cailin Sully-DanielsAssociate Director778.372.4414 | cailin.sullydaniels@cbre.com

CBRE HOTELS BROKERAGE | www.cbrehotels.com

TORONTOBill Stone*416.815.2371 | bill.stone@cbre.com

CALGARYGreg Kwong*403.750.0514 | greg.kwong@cbre.com

Deborah Borotsik**416.815.2347 | deborah.borotsik@cbre.com

Sylvia Occhiuzzi**416.874.7264 | sylvia.occhiuzzi@cbre.com

* Broker** SalesRepresentative

37 CBRE HOTELS | MAY 2020Source: CBRE Hotels’ Trends in the Hotel Industry National Market with reproduction and use of information subject to CBRE Limited Disclaimer | Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

DISCLAIMER

All information contained in this document as well as in CBRE Limited (“CBRE”) publications, or otherwise provided by CBRE isdesigned as a reference and a management tool for the internal use of companies and agencies involved in the travel and tourism industry. Reproduction and quotation in documents and matters relating to provision of third party consulting advice,business planning, solicitation of public funds, debt and equity financing, litigation, property tax or other legal and financial matters is NOT PERMITTED without the written permission of CBRE. Quotation and reproduction of this material is permitted otherwise ONLY if credited to CBRE and referencing our disclaimer as follows: Source: CBRE Limited with reproduction and use of information subject to CBRE Limited Disclaimer / Terms of Use as detailed at https://www.cbre.ca/en/real-estate-services/business-lines/valuation-and-advisory-services/hotels-valuation-and-advisory-services/disclaimer

Users of this information are advised that CBRE Limited does not represent the information contained herein to be definitive or all-inclusive. CBRE Limited believes the information to be reliable, but is not responsible for errors or omissions.