HENDERSONVILLE, Tennessee—There is a common phrase used by Western Canadians: “The West is the best.” Though this expression—which originated from the economic strength of the Western provinces Alberta and British Columbia—holds true as 2008 comes to a close, it may need revision in the coming year.
According to the Conference Board of Canada, the outlook for Saskatchewan and Manitoba, two of the country’s three so-called prairie provinces, is looking up: “High prices for nearly all of their natural resources will make them the two fastest-growing economies in Canada.”
So, how has this positive and rapid economic growth affected hotel performance in these two provinces?
According to the STR census database, there are 147 hotels, representing 14,335 rooms, operating in Saskatchewan and Manitoba. November year-to-date, demand for these two markets increased 2.0 percent, while supply declined 0.7 percent. Meanwhile, Alberta experienced a 0.5-percent demand increase and 4.5-percent supply increase, compared to 0.2-percent demand increase and 2.2-percent supply increase for all of Canada.
Data through the end of November show there are over 46 hotel projects in the active pipeline (In Construction, Final Planning and Planning phases) representing over 5,076 rooms for the Alberta market. In Saskatchewan/Manitoba, the active pipeline reports nine projects, representing 845 rooms.
As we know, when hotel demand growth outpaces supply growth, positive occupancy growth will be experienced. For the month of November, Saskatchewan/Manitoba market occupancy increased 3.0 percent to 75.1 percent, and year-to-date occupancy increased 2.7 percent to 71.1 percent. Out of the six key Canadian markets we analyzed for this article, the Saskatchewan/Manitoba market was the only one with positive occupancy growth.
Shifting attention to rate, year-to-date average daily rate was CAD$107.59 (US$88.14), growing more than 9.0 percent over last year. While the Saskatchewan/Manitoba market’s actual rate is less than that of the other key markets, a combination of positive occupancy and ADR growth generates revenue per available room values that far outpace the other markets.
Global demand for the area’s energy and agricultural products means that businesses are expanding and the demand for skilled workers is on the rise. Analysis of Saskatchewan/Manitoba day-of-week performance shows that weekdays supporting business travel lead in both occupancy and rate. For the year ending in November, Tuesdays through Thursdays have experienced occupancy rates over 75 percent and ADR over CAD$107 (US$87.65). Saturdays also appear to do quite well for the market, which is a good indicator of a healthy leisure segment. Year-to-date occupancy ended a little over 73 percent and an ADR close to CAD$108 (US$88.47).
Year end 2008, the Conference Board of Canada is projecting Saskatchewan’s gross domestic product to rise by 4.2 percent and Manitoba’s by 3.6 percent, both well above the 1.7-percent growth predicted for all of Canada. With a healthy economy in the prairies and upward-trending lodging indicators, we anticipate prosperity in 2009 for the Saskatchewan/Manitoba travel sector. While many Canadians will continue to argue that the “West is best,” there is no denying that in 2009 it will also be “Merry in the prairies.”