Impact on the market
It’s impossible to see that much new development in one year without it impacting occupancy rates, especially at a time when our city growth is slowing.
I predict a five to 10 per cent drop in overall occupancy for a couple of years. The market recovery will obviously be dependent upon how quickly that growth returns and the number of new rooms added in the coming years.
Why the interest in Saskatoon?
It’s not hard to understand the unprecedented interest in Saskatoon from hospitality sector investors. There was a period in 2013 and 2014 when we were reporting the highest occupancy rates in Canada.
During that same period, the average daily rate was hovering around $150. Those two combined factors spell profit, even when applied to the cost of new construction and rising land prices.
It was only a matter of time before those numbers translated into more rooms.
What’s in the future?
We see only one new property opening in 2016: a 120-room Marriott Town & Suites on Preston Avenue. Already on the drawing board for 2017 is a new 117-room Holiday Inn Express on College Drive as well as an 86-room Staybridge Suites.
We’re asked if we believe there’s room in our market for further expansion in the foreseeable future. My response is there’s room only for patient money.
Opportunity exists if investors are anxious to enter our market and find below-market returns acceptable for a few years.
Let’s hope my predictions are incorrect. Is there anything you might know that could challenge these thoughts?