Canada -  Regina

Overview:

The Regina hotel market is driven largely by the agriculture sector and the oil and gas industry. As the capital city of Saskatchewan, the market also benefits from government demand.

The drop in oil prices negatively affected the mining sector, which contributed to a 0.5% drop in the city’s real GDP in 2015. RBC projects that the provincial real GDP will contract a further 0.9% in 2016, but the provincial economy is expected to recover in 2017 and realize positive growth of 1.6% once oil prices increase. According to the Conference Board of Canada, the city’s real GDP is projected to grow 0.7% in 2016.

With the decline in economic activity, the Regina lodging market suffered losses in both occupancy and ADR in 2015, resulting in a lower RevPAR of $79.61, down 9.6% from the previous year. A 5.9% increase in the room supply was largely responsible for the significant decrease in occupancy.

In the 2015 HVI report, the per-room value for the Regina hotel market was projected to decrease by 10.4%, which is in line with the actual market performance—the per-room value for the market in fact dropped 10.2%. The market’s per-room value for 2015 occupies tenth place among the 19 major lodging markets.

In 2016, the freefall in the market-wide RevPAR seen in 2015 is projected to come to an end, although a modest decline of 1.8% is anticipated, brought about by slight decreases in both occupancy and ADR. The market is still struggling to absorb the large influx of new rooms that have entered the market since 2014. However, market-wide demand is projected to grow by 8.0%, which will nearly offset the 9.2% increase in supply in 2016. From 2016 to 2019, the room supply is projected to grow a further 6.3%; approximately 610 rooms are expected to enter the market in this period.

Since peaking at $151,012 in 2013, the Regina market’s per-room value has been on a downward slide with the softening of market conditions and substantial increases in the room supply. This trend is expected to continue in 2016, when market’s per-room value is projected to decrease by 1.3%, settling at $119,281. Nevertheless, growth is projected to resume in 2017 after oil prices come back. The per-room value is projected to reach $125,287 in 2019, which puts the market in fourteenth position among the 19 major markets in Canada.

Valuation Trends and Predictions:

Regina Canada
Previous Year -1% (15 of 19) +9% (12 of 19)
Growth in 2017 +2% (15 of 19) +5% (12 of 19)
Growth in next 3 years +6% (18 of 19) +8% (15 of 19)

Change In Value For Market:

Regina RevPar % Change

For more information, please contact:

Carrie Russell, AACI, MAI, RIBC, ISHC
CRussell@hvs.com
  • +1 604 988-9743 (w)