Canada -  Edmonton

Edmonton's economy, although quite diverse, has been negatively affected by the drop in oil prices, which translated into a decline in an array of sectors for the city in 2015. The economy is expected to struggle through 2016 because investments in most other sectors have followed the same downward trajectory as oil and gas investment.

According to Conference Board of Canada, the city's GDP declined by 1.5% in 2015, and it is projected to contract another 0.6% in 2016 as oil prices remain weak. With the expectation that oil prices will start to climb, Edmonton is projected to see a resumption of growth in 2017, when the GDP is projected to increase by 1.8%.

In 2015, the RevPAR for Edmonton fell sharply by 10.9% to $83.22, down from $93.39 in the previous year. A slight decrease in ADR, a sharp drop in demand, and new supply entering the market resulted in this loss in RevPAR. The same pattern is projected to recur in 2016 with a 15.6% decline in RevPAR, which at $70.22 would be the lowest since 2006.

Consequently, the per-room value for the Edmonton market likewise fell in 2015, by 13.8%. This was greater than the 10.2% drop that we projected in the 2015 HVI because the final year-end performance of the market was softer than anticipated.

For 2016, the per-key value is projected to fall another 18.6% to $109,160, the lowest annual value that we have seen in this market.

Growth in the per-room value is projected to resume in 2018, but the pace of growth is expected to be slow with a large amount of new supply still entering the market—the room supply is expected to increase 10.9% between 2016 and 2019. The new rooms will make it difficult for this market to realize the same performance levels as it had before the downturn in the oil and gas industry. With this loss in value, the Edmonton market is projected to drop from sixth position in 2015 to the rank of sixteenth in 2019 with a per-room value of $115,530.

Change In Value For Market: ($CAD)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Edmonton RevPAR Change ($CAD)

Edmonton RevPAR ($CAD)

Year RevPAR
2006 $79.20
2007 $88.85
2008 $92.93
2009 $79.89
2010 $76.60
2011 $77.32
2012 $83.20
2013 $90.52
2014 $93.33
2015 $83.22
2016 $70.22
2017 (f) $68.82
2018 (f) $71.13
2019 (f) $72.68

For more information, please contact:

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