Inbound International Tourist Arrivals to Canada Hits New Record Through End of 2018: Report

Within the latest INNvestment Canada Hotel Report by Colliers International Hotels, the Canadian Tourism Snapshot segment reports that Canada hit a multi-decade low in 2009 for inbound international tourists with 15.7 million overnight stays. Ten years later, confluences of factors have assembled into a sustained rebound with 5.4 million additional overnight arrivals through the end of 2018, which hit a new record of 21.1 million.

By market, the United States has contributed 2.8 million of the additional stays with a CAGR of 2.2 per cent, versus other-international markets at 2.6 million (CAGR of 5.1 per cent).

The Canadian dollar, sustained international marketing, and growth of critical infrastructure in major cities, are expected to continue inducing cross-border travel.

China, the United Kingdom, India, Mexico, Australia, France, Germany and Japan also dominate the balance of other-international markets.

The United Kingdom has held the top position contributing approximately 814,000 tourists last year, however, China’s CAGR of 16.4 per cent over the past decade is by far the quickest growing market.

India and Mexico are among the top origins by growth rate with ten-year CAGRs of 10.3 per cent and 9.2 per cent, followed by Australia at 5.5 per cent and France at 4.0 per cent. Although the growth rate for Germany and Japan has performed below the market average, both countries have grown their absolute share of visitors.

Since the introduction of Approved Destination Status (ADS) in early 2010, China has hit a new record for overnight stays in Canada every year since 2003 averaging approximately 60,000 net new tourists annually.

According to an averaging data published by Destination Canada, new routes from several Chinese cities to Canada has facilitated the increase of tourists with direct air seat capacity growing by nearly 17.8 per cent over the 2015-2018 period.

This influx has been a key factor to accommodate the approximate 600,000 arrivals over the past decade. In a study published by McKinsey & Company, estimated outbound trips should continue to grow by an average of 6.5 per cent per year through 2020.

The report suggests that the low levels of the Canadian dollar will continue to provide an important catalyst for additional cross-border travel demand.

Canada’s tourism marketing initiatives remain a critical component to capturing growing overnight tourism from first-time travelers markets such as China, India, and Mexico. The longer length of stay and overall expenditures present a lucrative opportunity for the lodging sector.

Approximately $226 million of hotel transactions occurred across Canada in the first quarter of 2019 with 29 deals reported. Market activity paced below the $350 million recorded in Q1 2018, while average price per room metrics remained stable year-over-year at $81,700. Ninety per cent of hotel transactions by number of deals were limited-service properties in secondary and tertiary markets.

Three quarters of hotel investment activity took place in the Eastern half of the country, primarily in Ontario, which represented nearly 60 per cent of the quarter’s volume total.

Year-over-year, transaction volume remained consistent in Ontario and Alberta and trading growth in Nova Scotia and New Brunswick was not enough to make up for a slower pace of transactions in other Provinces.

INNvestment Canada Hotel by Colliers International Hotels’ outlook for the national transaction pipeline remains positive. The end of Q2 expects volume to pickup considerably with full-year volume anticipated to be in the $1.5 – $2.0 billion ranges.

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