Move over, housing market — Toronto's hotel industry is booming too
Downtown Toronto hotels had 16% increase in revenue generated by each available room in 2016
You've heard all about Toronto's hot housing market over the years — well, the hotel industry in Canada's largest city is booming, as well.
Hotel investment across the country hit a record-setting level last year with more than $4 billion in hotel transactions, according to commercial real estate services company CBRE, and another $2.8 billion worth of business deals recorded so far this year.
"Downtown Toronto has represented a third of the transaction volume for the entire country," said Bill Stone, executive vice-president for CBRE Hotels. "All eyes are on Toronto."
The Sheraton Centre on Queen Street West, for instance, was recently bought for $355 million, marking the largest single hotel transaction in Canadian history.
And downtown Toronto hotels are also growing in terms of revenue, with a 16 per cent increase in the amount of money generated by each available room in 2016, which CBRE expects to grow by another eight per cent in each of the next two years.
That growth has been sparked by lots of people coming to Toronto for leisure travel, commercial development, and growing corporate demands, Stone explained.
"The city's been hitting on all cylinders for sure," he said. "And, plus, what we've seen is the whole creation of a new luxury hotel set which has helped expand the demand base in the city."
Tourists staying longer, spending more
Andrew Weir, executive vice president and chief marketing officer with Tourism Toronto, said the city's growing tourism market is definitely a factor.
"They know there's a great dining scene, they know there's a great live music scene, and a theatre scene, and neighbourhoods, and shopping," he said.
"It's less surgical, and as a result the trip length is getting longer; we're seeing people staying longer when they're here, doing more, spending more."
There's been nearly a decade of growth in U.S. and other international travel to Toronto, Weir added. International arrivals to Toronto are up more than 12 per cent from the same time last year, running ahead of the national growth of 9.5 per cent, he said.
And, of course, many of those travellers will need hotels — or, perhaps, Airbnb rooms.
According to the company, 450,000 Airbnb guests spent more than $417 million in Toronto last year.
Toronto becoming 'global centre'
Despite the apparent strength of Toronto's hotel industry, some say the popular homestay service could put a dent in the both the housing and hotel markets in the years to come as downtown redevelopment leads to more condos and fewer hotels.
"We've had a few really good years, but it's not always going to stay like it," said Thorben Wieditz, a spokesperson for Fairbnb Coalition, a group of homeowners, tenants, tourism businesses and labour organizations concerned about the rise of Airbnb.
The hotel room supply in the downtown core has been stagnant for a decade, while the Airbnb supply has increased, he said — and that shift could lead to job losses.
But Stone said there's enough demand for both traditional hotels and other forms of lodging.
"Toronto is continuing to come of age," he said. "It is maturing beautifully and it's really becoming a global centre in its own right, and I think international investors see it that way."