Each year, HVS reviews and analyzes the Canadian hotel lending environment following a comprehensive survey. With the unprecedented change that 2020 has brought, this year’s survey looks to gain clarity on the current lending environment and the overall health of the hotel finance sector across the nation.
HVS compiled the Q3 2020 performance statistics of brands reported by public companies. The data reflect the gains made during the post-lockdown summer months versus a very low Q2; however, with leisure travel slowing in the current and coming quarter, coupled with the increasing COVID-related restrictions, this trend may be short lived.
Through Q3 2020, RevPar in Canada continues to deteriorate, declining 61% over 2019. Hotels in the luxury segment and those with more than 500 rooms have taken the brunt of the impact. Covid-19 is not affecting markets uniformly across the country. The Okanagan and Northern Ontario markets have fared best with decreases of 33% and 35% while the hardest hit market, Downtown Montreal has a RevPAR decline close to 80%. With the pandemic not slowing, we don’t foresee improvement until the spring.
Since mid-summer, we have re-appraised 140 hotels that we valued in the years and months leading up to the onslaught of the COVID-19 pandemic in March 2020. Not every hotel has lost value, but value declines have predominantly fallen in the range of 15% to 30%.
Since early March, greater San Diego-area hotels have suffered unprecedented declines in demand, similar to most cities in the United States, because of the COVID-19 pandemic. How far has the San Diego hotel market fallen? How does this compare to the last recession? What will the recovery look like?
Since early March, metro Denver-area hotels have suffered unprecedented declines in demand, similar to most cities in the United States, because of the COVID-19 pandemic. How far has the Denver hotel market fallen? How does this compare to the last recession? What will the recovery look like?
Hotels are complicated investments and evaluating the most suitable hotel operating model for a hotel investment is crucial to ensure that the owner’s return is optimized. This publication summarizes the evolution of a number key terms in the hotel management agreements and our outlook on how these key terms may evolve in the future, provides an overview of franchise agreements and highlights alternative agreements that are being considered by sophisticated owners in the Middle East region.
Following waves of asset of appreciation, the pendulum has swung, and many hotels will be facing significant value declines in the current economic climate. As owners look for every way to reduce operating expenses, they should remain vigilant to pending fluctuations in real property assessment levels and proactive on appealing their assessments, if warranted.
It is inevitable – many hotels will go into receivership and/or foreclosure in the coming months. Some owners cannot afford to fight any longer, some lenders cannot kick the can down the road any longer, or any number of other reasons will start them down this path.
This article explores operational changes, specifically looking at cleanliness, as the hotel industry adapts to the challenges of COVID-19, outlining the initial response taken by hoteliers and examining where we are as an industry today and what to expect in the future, now that brands have established procedures and protocols for addressing the pandemic.