oliver hotel market study & economic feasibility
TRANSCRIPT
OLIVER HOTEL MARKET STUDY & ECONOMIC
FEASIBILITY ANALYSIS
TOWN OF OLIVER, BRITISH COLUMBIA
URBANICS CONSULTANTS LTD.
OLIVER HOTEL MARKET STUDY & ECONOMIC FEASIBILITY ANALYSIS
TOWN OF OLIVER, BRITISH COLUMBIA
Prepared for: TOWN OF OLIVER
November, 2012
Prepared by: Urbanics Consultants Ltd. Suite 2000 - 355 Burrard Street,
Vancouver, B.C., V6C 2G8
TABLE OF CONTENTS
1.0 INTRODUCTION - 1 -
2.0 ECONOMIC CONTEXT - 4 -
2.1 GLOBAL ECONOMY - 4 -
2.2 NATIONAL ECONOMY - 5 -
2.3 BRITISH COLUMBIA ECONOMY - 8 -
2.4 REGIONAL & LOCAL ECONOMY - 11 -
2.4.1 REGIONAL DISTRICT OF OKANAGAN-SIMILKAMEEN: - 11 -
2.4.2 TOWN OF OLIVER: - 15 -
2.4.3 TOURISM INDICATORS - 21 -
3.0 HOTEL/RESORT INDUSTRY OVERVIEW - 32 -
3.1 CURRENT LEISURE MARKET TRENDS - 32 -
3.2 FUTURE LEISURE MARKET TRENDS - 36 -
4.0 TOURISM ACTIVITY TRENDS - 41 -
4.1 WINE TOURISM TRENDS - 41 -
4.2 CULTURAL TOURISM TRENDS - 47 -
4.3 OUTDOOR ACTIVITY TRENDS - 49 -
4.4 SPA & WELLNESS TOURISM - 53 -
5.0 AREA ASSESSMENT - 54 -
5.1 TRANSPORTATION - 54 -
5.2 DEMOGRAPHIC PROFILE - 57 -
5.3 LAND USE POLICIES & DEVELOPMENT TRENDS - 64 -
5.4 INTRINSIC QUALITIES - 67 -
6.0 SUPPLY ANALYSIS - 72 -
7.0 HOTEL DEMAND ANALYSIS - 83 -
7.1 DEMAND SUBMARKETS - 83 -
7.2 STUDY AREA - 84 -
7.3 SUPPLY PROJECTION - 85 -
7.4 FUTURE GROWTH IN DEMAND FOR HOTEL ROOMS - 86 -
7.5 MARKET SHARE & OPPORTUNITY ANALYSIS - 88 -
7.6 INFLUENCES OF FUTURE DEMAND - 91 -
7.7 HOTEL MARKET ANALYSIS - 93 -
8.0 SITE ASSESSMENT - 98 -
9.0 RECOMMENDED HOTEL DEVELOPMENT PROGRAM - 104 -
10.0 FEASIBILITY ANALYSIS - 108 -
10.1 PROJECT COSTS - 108 -
10.2 PROJECTED REVENUES AND EXPENSES - 109 -
10.3 PROJECTED CASH FLOW ANALYSIS - 114 -
10.4 SENSITIVITY ANALYSIS - 117 -
11.0 RECOMMENDATIONS - 119 -
12.0 ECONOMIC IMPACT ANALYSIS - 125 -
APPENDIX I - 2012 OLIVER EVENTS - 129 -
LIST OF TABLES & FIGURES
TABLE 1: British Columbia Economic Indicators……………………………………9
FIGURE 1: Okanagan-Similkameen Regional District Context Map……………..12
TABLE 2: Thompson Okanagan Unemployment Rate……………..……………...13
FIGURE 2: Town Of Oliver Contextual Map………………………….....................16
TABLE 3: Labour Force by Industry Division ……………..….…............................18
TABLE 4: Town of Oliver Building Permits ………………....…...............................20
TABLE 5: Total Room Revenue, Property Counts & Room Counts .......................26
TABLE 6: Regional Tourism Indicators - Revenue per Room………………..……27
TABLE 7: Hotel Occupancy Rates……………............................................................29
TABLE 8: Average Daily Room Rate…………………………………...…………....31
FIGURE 3: Age Pyramid of the Canadian Population .............................................33
FIGURE 4: Outdoor (Non-Winter) Activities in BC………………………...………38
TABLE 9: Origin of All Survey Participants by Traveller Group…………………44
TABLE 10: Outdoor & Cultural Activities ..................................................................46
TABLE 11: Highway 97, 10 Year Summary Traffic Volume Data…………….…..55
TABLE 12: Population & Age Group Characteristics (2011)………………………59
TABLE 13: Select Household Characteristics…………………………………….….61
FIGURE 5: Southern Okanagan Local Health Area Context Map…….…………..62
TABLE 14: RDOS & South Okanagan Local Health Area Projected Population...63
FIGURE 6: Oliver wine village study area (2008)……………………………….......66
TABLE 15: Oliver Over-Night Accommodation Supply…………………...………74
TABLE 16: Osoyoos Over-Night Accommodation Supply……………………......76
TABLE 17: Penticton Over-Night Accommodation Supply……………………….78
TABLE 18: Okanagan Falls Over-Night Accommodation Supply………………..79
TABLE 19: Summerland & Naramata Over-Night Accommodation Supply…....80
FIGURE 7: Study Area Comparison - Room Totals ..................................................82
TABLE 20: Study Area - 2011 Occupied Room Nights .............................................85
TABLE 21: Study Area - Supply Projections ..............................................................86
TABLE 22: Future Growth In Demand For Hotel Rooms ........................................87
TABLE 23: Hotel Opportunity Analysis .....................................................................90
TABLE 24: Ranking of Global Hotel Brands By Room Count .................................95
TABLE 25: Ranking of Top U.S. Hotel Chains ...........................................................96
FIGURE 8: Site Context Map ........................................................................................99
FIGURE 9: Recommended Hotel Site ........................................................................100
TABLE 26: Hotel Complex Development Program ................................................107
TABLE 27: Land & Development Costs ....................................................................109
TABLE 28: Projected Average Daily Room Rate & Room Revenue .....................110
TABLE 29: Hotel Complex Revenues & Costs .........................................................113
TABLE 30: Projected Cash Flow Analysis ................................................................116
TABLE 31: 3.55 Acre Site Development Program ...................................................121
TABLE 32: Hotel Complex - Projected Employment ..............................................127
TABLE 33: Hotel Complex - Development Cost Charges ......................................128
EXECUTIVE BRIEF
Urbanics Consultants Ltd. has been retained by the Town of Oliver for the
purpose of examining the market demand potential and economic feasibility for
the development of a hotel. In particular, the report seeks to identify the various
target markets and assess the market opportunity for a hotel development in
Oliver, followed by a description of a recommended development program and
financial feasibility analysis.
The following provides a summary of important market demand findings and
conclusions:
Overall, the consultant's analysis reveals that there remains a strong opportunity
to grow the hospitality and tourism industry in Oliver, catering to both the local
market and tourists/visitors alike. There are some noted challenges however,
and as such, it will be important to capitalize on Oliver's unique strengths in an
endeavor to grow the hospitality industry.
An analysis of accommodation properties reveals that Oliver currently contains a
limited supply of overnight accommodation facilities and lacks mid to upscale
hotels/resorts with meeting space and amenities to compete with the
hotels/resorts situated in the neighbouring communities of Osoyoos, Penticton,
and Summerland.
Based on results of the supply analysis and review of economic and market
demand factors, the consultant recommends that there is opportunity for
development of a 'mid-upper' scale hotel property in the range of 80 to 100
rooms in Oliver. A 'mid-upper' scale hotel is classified at the high-end of the mid-
price category and the low-end of the upscale category.
A mid-upper range hotel property, with amenities such as a small to mid-size
conference centre with banquet facilities, meeting rooms, swimming pool, hot
tub, fitness facility, restaurant/lounge, small retail component, and possibly a
small spa, will serve to attract a broad market base, including families, local and
out of town patrons, as well as business patrons on a year-round basis.
A development program for a recommended 90-room hotel was formulated,
comprising of approximately 62,700 square feet. A preliminary feasibility
analysis was conducted for the hotel complex as per the medium attraction
scenario, followed by a series of sensitivity analyses designed to explore various
scenarios of performance.
Potential sites for development were examined from the standpoint of
transportation access, exposure and visibility dynamics, surrounding amenities,
site capacity, and other locational and site assessment considerations. The site
deemed by the consultant to represent the greatest potential is the Town-owned
property adjacent to the Okanagan River Channel, generally bounded by
Fairview Road to the south, the Oliver Visitor Centre to the north, the Okanagan
River to the east, and Station Street to the west. There are a number of
advantages to this site including that the site is in a central location in the heart
of Oliver, borders the Okanagan River, is directly south of the Oliver Visitor
Centre, is large enough to develop not only a hotel but complementary uses, and
there remains potential to acquire properties in the site's immediate
surroundings - particularly on the west side of Station Street. There are
opportunities to create an exciting development program, incorporating the 80 to
100 room hotel, along with compatible and synergistic uses. It is noted that
additional private sites may also be feasible, but detailed analyses were beyond
the scope of this report.
Given that hotels (especially on a stand alone basis) are found to be relatively
difficult to finance (as is demonstrated from the results of the feasibility
assessment in Section 10.0), the consultant has provided recommendations that
centre on methods that can potentially be applied as a means of subsidizing the
hotel's capital costs. One recommendation centres on developing the hotel
complex in combination with compatible and synergistic uses such as attractive
retail shops, including some form of "wine village", service-commercial
establishments, professional arts offices, and residential components. If the right
synergy is achieved, it serves to increase customer patronage, rent levels, sales
volumes, and both the investment and market value of the project. The idea is to
create a lively year-round people place and contribute to an overall revitalization
of downtown Oliver.
Additional methods that can potentially be applied as a means of off-setting costs,
include:
• Development Cost Charge exemptions, or reduced fees
• Discounted land value with "recovery" through participation features in
the developer's net cash flow
• Property tax free zones, or tax 'holiday' zones (particularly for the hotel
facility for a period of time)
• Zoning provisions (mixed-use, higher order land uses, comprehensive
development, etc.)
• Providing the development with increased marketable density
• Reduced parking requirements and/or the inclusion of adjacent land for
surface parking
• Municipal owned and managed parking structure
• Participation in the financing/ownership of the hotel's proposed
conference centre
• Any other similar cost reducing interventions
The degree to such "interventions" can only be ascertained following the
preparation of the complete proposed development program, including
preliminary architectural plans, together with its intended financial analyses.
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1.0 INTRODUCTION Urbanics Consultants Ltd. has been retained by the Town of Oliver for the
purpose of examining the market demand potential and economic feasibility for
the development of a hotel.
In particular, the report seeks to identify the various target markets and assess
the market opportunity for a hotel development in Oliver, followed by a
description of a recommended development program and financial feasibility
analysis.
In terms of report structure, the following serves as a brief description:
1.0 INTRODUCTION
2.0 ECONOMIC CONTEXT: An important review of the economic conditions
locally, regionally, nationally, and internationally, recognizing that the
quality of anticipated economic growth is an important and fundamental
foundation for the development of hotel properties.
3.0 HOTEL/RESORT INDUSTRY OVERVIEW: A detailed overview of the
recent and anticipated trends of the hotel/resort industry.
4.0 TOURISM ACTIVITY TRENDS: A review of tourism trends relevant to the
Oliver region. Market niches that are profiled include wine tourism, cultural
tourism, spa and wellness tourism, outdoor activity trends, and related
tourism niches including aboriginal tourism, eco-adventure tourism,
agritourism, and culinary tourism.
5.0 AREA ASSESSMENT: Evaluates key physical, locational and demographic
characteristics of the subject area. An examination of access characteristics,
demographic profiles of the local and regional population and specific
intrinsic qualities of Oliver have been provided.
6.0 SUPPLY ANALYSIS: Provides an overview of existing and proposed
accommodation properties in Oliver, as well as nearby communities
including Osoyoos, Okanagan Falls, Penticton, Summerland and Naramata.
7.0 DEMAND ANALYSIS: Identifies the market opportunity for a hotel facility,
focusing on key demand sub-markets, and analyzing the characteristics of
each market demand segment in an effort to determine future levels of room
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night demand. The section concludes with the recommendations regarding
the appropriate size, market orientation, timing, and hotel operators for an
Oliver hotel.
8.0 SITE ASSESSMENT: An assessment of the site deemed by the consultant to
represent the greatest potential in terms of hospitality development,
providing a description of the site and analysis of its strengths, weaknesses,
opportunities and threats.
9.0 RECOMMENDED HOTEL DEVELOPMENT PROGRAM: Outlines the
recommended development program for a hotel complex in terms of site
planning considerations, supportable floor area, etc.
10.0 FEASIBILITY ANALYSIS: Incorporates preceding research and market
analyses into an overall five-year pro forma statement of revenues and
expenses for the hotel construction and operation followed by a projected
cash flow analysis and sensitivity analysis.
11.0 RECOMMENDATIONS: Explores possible strategies and methods to
implement as a means of off-setting capital costs of hotel development. A
recommended development program for additional uses is provided.
12.0 ECONOMIC IMPACT ANALYSIS: Evaluates probable economic
impacts for the proposed hotel complex with consideration for employment
impacts and municipal revenue impacts, including Development Cost
Charges.
Background data for this study was obtained from a variety of public (national,
provincial and regional), and private sector sources, as well as from field work
conducted by the consultant.
Additionally, as with all market studies of this nature, a number of forecasts and
assumptions regarding the state of the economy, the state of future competitive
influences, and population projections have had to be made. These assumptions
are made with great care and are based on the most recent and reliable
information available.
In addition to the specific assumptions identified throughout the report, this
study is based on the following general assumptions:
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• Real G.D.P. growth and other economic indicators for the area will not
significantly differ from the projections indicated in the study over the
course of the study period.
• No unforeseen economic or political events will occur within the study
period on a national, provincial, or local level, which would significantly
alter the outcomes of the study’s analyses. Short-term fluctuations are
likely to occur, but long-term gradual growth rates should prevail.
• The demand and market analyses are based on estimates, assumptions
and other information developed from research of the market and
knowledge of the industry.
Should these or any of the other assumptions noted in this study, be undermined
by the course of future events, the consultant recommends that the study’s
findings be re-examined.
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2.0 ECONOMIC CONTEXT
The economic vitality of the global, national, provincial and regional economies
is an important consideration in forecasting market potential and demand for a
hotel complex. Economic conditions bear strong correlation with potential
buying power of relevant target markets, and the study of local economic
conditions will provide insights on the health of the region in terms of market
strength.
2.1 GLOBAL ECONOMY1
The global economy remains in a volatile state due to the uncertainty of the U.S.
economic recovery, Europe’s debt crises, and weakening growth in emerging
markets. A report prepared by the International Monetary Fund in April 2012
states that the global economic recovery is gradually gaining strength after
significant setbacks during 2011, with better policies in the euro area and recent
improvements in the U.S. However, such recent improvements are very fragile.
In the U.S., it was noted that growth was weaker than anticipated at the start of
2012, however economists believe that the U.S. economy will begin to strengthen
going forward. Economic recovery in the U.S. will be a key factor in the growth
of Canada’s economy, particularly for a province such as Ontario, which
depends greatly on the U.S. market.
The economic growth of the emerging nations of China, India and Brazil, has
been declining in recent months. China’s economic growth fell to a three-year
low of 7.6% in the second quarter of 2012, which is relatively strong when
compared with the U.S. and Europe, but low for China, which has experienced
years of double-digit growth. China has cut interest rates and gasoline and diesel
retail prices while implementing (with caution) what is being described as a
“mini-stimulus” plan. China’s manufacturing experienced little growth in July,
1 Canadian Business (August 1, 2012);
International Monetary Fund. World Economic Outlook (April, 2012);
Forbes, IMF World Economy Getting Worse (July 16, 2012).
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2012 and the weakening trend in export demand has led to the need for more
efforts to stimulate the economy.
The World Real GDP growth is forecasted to be around 3.5 percent in 2012 and
3.9 percent in 2013, down from the 5.3 percent growth that was experienced in
2010. As such, there is much uncertainty within the world economy at present, as
recently demonstrated with the weak U.S. recovery, European debt crisis, and
slow-down in Emerging Market growth.
2.2 NATIONAL ECONOMY2
The Canadian economy is facing a period of modest growth for the most part.
While the prospects for commodities growth has shown signs of uncertainty, it is
expected that growth in the global markets will support demand for, and thus
the prices of, commodities at levels that will keep the commodities market
healthy in Canada.
Strengthening global commodity markets will be of particular importance for
resource-producing provinces in Western Canada. Provinces east of Manitoba,
which are generally less dependent on natural resources, are expected to
experience lower rates of growth than the national average. The Summer 2012
Conference Board of Canada’s Provincial Outlook forecasts solid growth in
Western Canada into 2013 and 2014. Natural resource developments are
expected to be a solid foundation for job creation, income growth and consumer
spending. Furthermore, according to RBC Economics, Alberta is to lead growth
in Canada for a reported second consecutive year in 2012, just slightly ahead of
Saskatchewan (4.0% GDP growth in Alberta, versus 3.7% GDP growth in
Saskatchewan). However, weak natural gas prices and volatile crude oil prices
are resulting in some uncertainty about future capital spending plans in the
energy sector. Central and Atlantic Canadian economies are anticipated to
slowly strengthen over the same period.
2 The Conference Board of Canada, Provincial Economies in for a Bumpy Ride in the Short Term (July 27,
2012).
RBC Economics, Provincial Outlook (June, 2012);
CMHC, Housing Market Outlook Canada Edition (Second Quarter 2012).
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Canadian employment is forecasted to improve along with overall economic
conditions and increase by 1.1% in 2012 and by 1.6% in 2013. The unemployment
rate is predicted to decrease to 7.3% in 2012 and about 7.0% in 2013.
According to Canada Mortgage and Housing Corporation, the Canadian housing
market is expected to moderate through the second half of 2012. Housing starts
have been relatively strong thus far in 2012, largely driven by multiple starts.
Multiple starts are expected to moderate with single starts remaining fairly level
for the remainder of 2012. Total starts are forecast to be 202,700 for 2012 and
decreasing to 195,700 for 2013 given the degree of uncertainty in the economy.
NATIONAL TOURISM SECTOR3
The Canadian tourism sector has been displaying positive characteristics as of
late. Tourism spending in Canada rose 0.9% in the first quarter of 2012. This is
reported as the 11th consecutive quarterly increase in tourism spending in
Canada.
Tourism spending by Canadians at home increased by 0.6% in first quarter 2012,
which has continued a trend that began in the third quarter of 2009. Tourism
spending by Canadians at home has risen by 47% from the first quarter of 2002 to
the first quarter of 2012. In fact, approximately 81% of tourism earnings were
derived from Canadians travelling at home in 2011.
Foreign visitors contributed only 19% of tourist receipts in 2011, which is a large
decline from 2000, when a 35% share of tourism revenues came from
international visitors. However, there are recent signs of improvement in the
international tourist market. Tourism spending by foreign visitors in Canada
increased 2.0% in the first quarter of 2012, following gains in overnight travel
from both the U.S. and overseas countries. Travel from China has grown strongly
in recent months. In fact, in the first five months of 2012, residents of China made
115,200 trips to Canada, marking a 22.9% increase from the same period in 2011.
3Statistics Canada, National Tourism Indicators, First Quarter 2012 (June 28, 2012);
CBC News, Business, Visits from China Increasing (July 18, 2012); Conference Board of Canada, Travel Markets Outlook: Metropolitan Focus, Spring 2012 (July, 2012).
- 7 -
Tourism GDP advanced by 0.7 percent in the first quarter, which is documented
as the 11th consecutive quarterly increase. Gains were experienced for most
tourism industries, notably transportation and accommodation.
The number of tourism jobs increased 2.3 percent year-over-year to 605,700 in the
first quarter. All tourism industries experienced gains, with jobs in food and
beverage services up 2.7%.
Following several years of declining visitation, overnight visits from the U.S. to
Canada are anticipated to experience modest growth in 2012 and over the
medium term. In addition, according to the World Tourism Organization,
international tourist arrivals are projected to grow by 3 to 4 percent in 2012, and
reach 1 billion for the first time.
Canadian tourism accounted for nearly $80 billion in revenues in 2011, and
supports more than 600,000 jobs, representing 2% of GDP – an amount that is
equivalent to forestry, fishing, farming and hunting combined.
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2.3 BRITISH COLUMBIA ECONOMY4
Despite the recent global economic concerns, indicators of economic performance
in early 2012 were primarily positive in the province. Employment has continued
to rise and is growing at a faster rate than Canada on a year to year basis at 1.9%,
and BC Consumers have continued to spend at a higher rate than the national
average increasing retail sales by 4.6%. Provincial real GDP is expected to grow
by 2.3% in 2012, higher than the national real GDP of 2.1% according to RBC
economics. BC’s moderate pace over the national economy can be attributed to
the softness of the trade sector which has slowed the GDP down from 2011’s
2.9%. 2012 GDP growth is anticipated to be slightly lower than growth
experienced in 2010 and 2011, reflecting greater headwinds in export markets. In
2013, with the onslaught of several new major projects, real GDP is anticipated to
grow modestly to 2.7%.
B.C.’s export market has had some encouraging gains and setbacks for this year.
There has been increase in softwood lumber exports to the United States by 17%
as a result of the recent recovery from the slump of US Housing. This increase in
exports is offset by setbacks in other commodities and markets, with lumber
exports to China decreasing for the first time in 6 years, in addition to the
decrease of natural gas exports and of all exports to the Europe Union due to
economic woes. Imports in the province continued to grow at 8%, which suggest
that trade is likely to be a drag on growth once again.
Two major upcoming projects are expected to strengthen the economic outlook
in the province in 2013 and beyond. These include the federal government’s $8
billion order for seven non-combat ships awarded to North Vancouver-based
Seaspan Marine, which is expected to stimulate shipbuilding activity in the
province in the next eight years. Additionally, the $3.3 billion modernization of
Rio Tinto Alcan’s aluminum smelter in Kitimat is anticipated to bolster economic
prospects. Furthermore, major pipeline projects, if approved, are expected to
strengthen the British Columbia economy, including the Kinder Morgan Trans
Mountain Pipeline, and the Enbridge Northern Gateway Project.
4 RBC Economics, Provincial Outlook (September, 2012);
Canada Mortgage and Housing Corporation (CMHC), Housing Market Outlook Canada Edition (Second
Quarter 2012);
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Please refer to Table 1 for an overview of British Columbia’s economic indicators.
BRITISH COLUMBIA TOURISM SECTOR5
The Conference Board of Canada reports that B.C.’s tourism industry will
experience modest growth in 2012, due to the improvements in the overall
economy and growing interest from Asia and other non-traditional markets.
Due to China’s granting of approved destination status for Canada in 2010, B.C.
is expected to see continued benefits.
It is forecasted that overnight visits to the province will increase by up to 2.1
percent in 2012, compared to a 0.4 percent decrease in 2011, and are anticipated
to average 2.7 percent growth from 2013 through 2016. The anticipated growth in
5 Government of British Columbia, Gaining the Edge A Five-Year Strategy for Tourism in British
Columbia 2012-201;
Vancouver Sun, B.C. Trends Ahead of Canada for Hospitality Sector (July 4, 2012);
Ministry of Jobs, Tourism and Innovation Research, Planning & Evaluation, Tourism Indicators – Data
Tables (2012);
Ministry of Tourism, Culture and the Arts, 2010/11-2012/13 Service Plan (March 2010);
Vancouver Sun, Alberta Buyers Big Winners as B.C. Axes HST (August 30, 2011);
Tourism BC, Visitor Market Profile (July, 2012).
TABLE 1BRITISH COLUMBIA ECONOMIC INDICATORS
2006 2007 2008 2009 2010 2011 2012 2013
Real GDP $2002 Millions 159,729 164,496 165,641 162,225 167,140 171,987 175,943 180,605
% Change 4.1 3.0 0.7 -2.1 3.0 2.9 2.3 2.7
Employment Thousands 2,147 2,223 2,226 2,218 2,257 2,275 2,315 2,349
% Change 2.6 3.5 2.0 -2.1 1.7 0.8 1.8 1.5
Unemployment Rate % 4.8 4.3 4.6 7.7 7.6 7.5 6.8 6.6
Retail Sales $ Millions 53,133 56,930 57,783 55,222 58,220 60,005 62,742 65,347
% Change 7.6 7.1 1.5 -4.4 5.4 3.1 4.6 4.2
Housing Starts Units 36,443 39,195 34,321 16,077 26,479 26,400 27,300 23,000
% Change 5.1 7.6 -12.4 -53.2 64.7 -0.3 3.4 -15.8
Consumer Price Index 2002 = 100 108.1 110.0 112.3 112.3 113.8 116.5 118.0 119.6
% Change 1.7 1.7 2.1 0.0 1.4 2.3 1.3 1.3
Source: RBC Economics (September, 2012)
Note: Figures highlighted in grey are RBC Economics' estimates
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employment in B.C. and Alberta is expected to boost domestic business and
pleasure travel.
In terms of domestic travel, BC was the destination for 22 million trips (9.8% of
total Canada wide domestic trips). According to a July 2012 publication by
Tourism BC, trips to/within BC have increased 4% over 2009 and 25% over 2006.
British Columbians took over 8 million overnight trips in BC in 2010,
corresponding to an increase of 9% from 2009 and an increase of 18% over 2006.
In terms of same day trips, in 2010, British Columbians took 11.1 million same-
day trips within BC, an increase of 12% from 2009 and an increase of 31% over
2006.
Tourism is one of B.C.’s largest and most sustainable industries, generating an
estimated $13.4 billion in revenue in 2010 and providing 127,000 jobs. To
capitalize and further expand B.C.’s tourism industry, the British Columbia
Provincial Government has released a five-year Tourism Strategy as part of the
B.C. Jobs Plan (2012-2016). The strategy is designed to increase visitor volume,
revenue, and employment, with the target of achieving tourism revenues of $18
billion by 2016 (5 percent growth per annum). One of the goals is to promote a
tourism industry that delivers a world-class, comprehensive range of tourism
products, destinations and enhanced visitor experiences that actively facilitates
and promotes the inclusion of green tourism practices and standards.
As a result of the Harmonized Sales Tax (HST) referendum, B.C. voters voted in
favour of returning to the Provincial Sales Tax (PST) and eliminating the HST.
Many real estate professionals have stated that the HST did not aide the
recreational property market in the province. This was particularly true within
the recreational property market in the Okanagan and the Kootenays, where a
large portion of buyers are from Alberta. Many prospective buyers were holding
out and waiting for the results of the referendum. Realtors are hopeful that the
removal of the HST will be well received from those looking to purchase a
secondary home within B.C.
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2.4 REGIONAL & LOCAL ECONOMY
2.4.1 REGIONAL DISTRICT OF OKANAGAN-SIMILKAMEEN: 6
The Regional District of Okanagan-Similkameen (RDOS) contains 1.2% of B.C’s
land mass and contains a population of 80,742 according to 2011 Census data.
The region encompasses a portion of the Interior plateau (west of the Cascade
Mountains) and the southern portion of the Okanagan Valley. The RDOS
includes the municipalities of Oliver, Penticton, Summerland, Okanagan Falls,
Osoyoos, Princeton and Keremeos, as well as surrounding rural areas. Please
refer to Figure 1 for a map of the Regional District of Okanagan-Similkameen.
6 Regional District of Okanagan-Similkameen, South Okanagan Regional Growth Strategy (2011);
Agriculture and Agri-Food Canada, Pacific Agri-Food Research Centre (2011);
Regional District of Okanagan-Similkameen, Regional Marketing Brochure;
BC Stats, Okanagan-Similkameen Regional District Quarterly Regional Statistics (Fourth Quarter 2011);
Okanagan College.
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The region is described as having a semi-arid climate with a mountain-to-valley
landscape that is conducive to growing tree fruits and grapes in the valley
bottoms and extensive beef production in the native grasslands. The region has
one of the rarest ecosystems in Canada, containing Canada’s only ‘pocket desert’
and is home to over 250 species at risk.
Agriculture plays a dominant role in the local economy as the South Okanagan is
traditionally and continues to be well known for its tree fruit crops and ranch
lands. There are numerous orchards of apples, cherries, peaches, plums, and
other soft fruits along with vineyards and nurseries. Today, the agricultural
sector has expanded to encompass value-added food production, wine
production, and agri-science. The Federal Government’s Pacific Agri-Food
Research Centre in Summerland provides local industry with state of the art
FIGURE 1OKANAGAN-SIMILKAMEEN REGIONAL DISTRICT CONTEXT MAP
Source: BC Stats
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research and scientific support in areas including, horticultural and field crop
production and protection, advanced processing, and soil resource conservation
and land evaluation. The South Okanagan contains more than 40 wineries,
producing internationally recognized wines, and is often referred to as "Napa of
the North".
In terms of the forestry sector, the 2011 annual allowable cuts for the timber
supply areas (which are located partially in this region), were increased to
facilitate salvage harvesting due to the Mountain Pine Beetle.
According to BC Stat’s fourth quarter 2011 Regional Statistics Report, the
Thompson Okanagan had an unemployment rate of 7.9% in 2011, down from 8.6%
in 2010 and 8.8% at the height of the recession in 2009. While generally having a
slightly higher unemployment rate than the province as a whole, 2004 and 2005
saw unemployment rates lower than the province at 6.6% and 5.2%, versus the
province’s annual unemployment rate of 7.2% and 5.8%, respectively. Please
refer to Table 2 below.
TABLE 2THOMPSON OKANAGAN UNEMPLOYMENT RATE
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
THOMPSON OKANAGAN 9.4% 8.8% 6.6% 5.2% 5.0% 4.4% 5.5% 8.8% 8.6% 7.9%
PROVINCE OF B.C. 8.5% 8.0% 7.2% 5.8% 4.8% 4.3% 4.6% 7.7% 7.6% 7.5%
Source: BC Stats, Quarterly Regional Statistics (fourth quarter 2011) Okanagan-Similkameen RD
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Thompson Okanagan Province
- 14 -
In terms of economic structure, BC Stats estimates that the RDOS contained 3,513
firms with employees as of December 2011. Of the total, approximately 91% of
the firms had less than 20 employees. The industry sectors with the greatest
number of firms with employees in the region were the Agriculture, Forestry,
Fishing and Hunting Sectors with 13.9% of total firms, the Retail Trade sector
with 13.5% of total firms, and the Construction sector with 11.8% of firms.
Okanagan College is a major driver of economic growth for the region.
Okanagan College is a multi-campus college with the main office in Kelowna
and major campuses in Penticton, Vernon and Salmon Arm. In addition, the
College contains Educational Centres in both Oliver and Summerland. The
college offers a number of career, continuing education, degree, developmental,
trades and technologies, and vocational programs. The school experienced a
record number of student enrolments in 2011, at 6,216 in mid-September,
compared to 5,976 in 2010. Since 2005, Okanagan College has grown by 46% -
exceeding government-set targets each year. A mandate of the South Okanagan
Regional Growth Strategy is to enhance the diversity of the labour force, in part
by supporting the research and development initiatives and programs of the
College in relation to key economic and business features in the South Okanagan.
These include agriculture, food processing, wine making, biodiversity, water
management, tourism, amenity migration and high tech applications including
those based on astrophysical research.
- 15 -
2.4.2 TOWN OF OLIVER:7
The Town of Oliver is situated in the south Okanagan Valley between Mount
Kobau and Mount Baldy, and contains a land area of approximately 5.50 square
kilometres with a population of 4,824 according to 2011 Census data. The Town
is located approximately 33 kilometres south of Penticton and 19 kilometres
north of Osoyoos on Highway 97, a major north-south highway that runs from
California to Alaska. The Town is referred to as the “Wine Capital of Canada” in
reference to its diverse selection of wines offered in the more than 25
internationally recognized wineries located in the immediate area. Oliver
produces approximately 36% of all the wine grapes in the province and
approximately 12 million bottles of wine are made annually, more than any other
location in Canada. The Oliver region contains over 400 farms, producing
predominately cherries, peaches, apricots, pears, and apples.
7 Tourism BC, Oliver British Columbia Official Visitor Guide;
BC Stats, British Columbia Building Permits for Development Regions, Regional Districts, and
Communities, by Type 2003-2011, 2012 YTD (June 8, 2012);
Statistics Canada, 2006 Census;
CBC, Osoyoos Band Site Picked for New Okanagan Jail (February 6, 2012);
The South Okanagan Relocation Guide 2012-2013
- 16 -
FIG
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- 17 -
Labour Force Characteristics:
The Town, Regional and Provincial labour force characteristics are presented in
Table 3. As can be observed, the percentage of Oliver's and the Region's labour
force employed in occupations unique to the primary industry (i.e. agriculture
and other resource based industries) is significantly higher than that found in the
Province (9.6% in the Town, 9.7% in the Region, and 3.9% in the Province). In fact,
primary agricultural-based employment provides direct employment for
approximately 3,000 workers in the South Okanagan. Tree fruit, vegetable and
cattle production comprise a large base for secondary manufacturing in the area.
In addition, the percentage of the labour force in the Town and Region that are
employed in the trades, transport and equipment operators and related
occupations, as well as health occupations, are slightly above levels experienced
in the Province. The level of health care occupations is not surprising considering
that Oliver is home to the South Okanagan General Hospital, which offers a
number of services including emergency services, Diabetes Education Program -
Okanagan, electrocardiogram, laboratory services, radiology, and the South
Okanagan Cardiac Wellness Program.
In addition to the South Okanagan General Hospital, other major employers in
the community include School District #53, K&C Silviculture, and OSC Growers
Coop. Combined, the hospital and school district represent about 500 employees,
making them the largest employers in town. Additionally, the Osoyoos Indian
Band based in Oliver is one of the largest employers in the South Okanagan.
Recently, the Provincial Government announced that a 360-cell correction centre
will be built on property owned by the Osoyoos Indian Band, approximately 7
kilometres north of Oliver. This has the potential to create up to 500 direct and
500 indirect jobs, and once completed will provide 240 new, full-time positions.
The Government anticipates the centre will be open by late 2015 or early 2016.
- 18 -
TABLE 3LABOUR FORCE BY INDUSTRY DIVISION (2006)
# % # % # %
Management Occupations 160 9.9% 3,660 9.8% 229,945 10.5%
Business, Finanace, and administration occupations 230 14.2% 5,315 14.3% 375,975 17.1%
Natural and applied sciences and related occupations 40 2.5% 1,320 3.5% 138,955 6.3%
Health occupations 155 9.6% 2,435 6.5% 120,360 5.5%
Occupations in social science, education, government
service and religion110 6.8% 2,115 5.7% 178,040 8.1%
Occupations in art, culture, recreation and sport 35 2.2% 760 2.0% 76,460 3.5%
Sales and service occupations 380 23.5% 9,575 25.7% 555,880 25.3%
Trades, transport and equipment operators and related
occupations285 17.6% 6,540 17.6% 339,500 15.5%
Occupations unique to primary industry 155 9.6% 3,625 9.7% 86,460 3.9%
Occupations unique to processing, manufacturing and
utilities65 4.0% 1,875 5.0% 91,545 4.2%
Total Experienced Labour Force 15 Years and Over 1,615 100.0% 37,220 100.0% 2,193,120 100%
Source: Statistics Canada, 2006 Census
Town of OliverOkanagan -
SimilkameenProvince of B.C.
9.9%
14.2%
2.5%
9.6%
6.8%
2.2%
23.5%
17.6%
9.6%
4.0%
TOWN OF OLIVERManagement Occupations
Business, Finanace, and administration
occupations
Natural and applied sciences and related
occupations
Health occupations
Occupations in social science, education,
government service and religion
Occupations in art, culture, recreation and
sport
Sales and service occupations
Trades, transport and equipment
operators and related occupations
Occupations unique to primary industry
Occupations unique to processing,
manufacturing and utilities
- 19 -
Development Activity:
Building permits can provide a general picture of the health of the local economy
and gauge real estate supply levels. As shown in Table 4, the construction sector
in the Town of Oliver saw mixed results between 2003 and 2011. An upward
trend in the value of building permits was observed between 2003 and 2006, with
the vast majority of value encompassing residential building permits. Total
building permit values reached $19.46 million in 2006, of which residential
permits comprised 95% of the total permit value.
2007 experienced a drop of nearly $5.6 million in permit values, however 2008
saw a substantial value increase of 76%, reaching $24.4 million. The value of
residential permits reached its peak in 2008 with $23.4 million, comprising 96%
of total permit values for that year.
The value of total permits decreased substantially in 2009 due to the onslaught of
the global recession. In fact, total permit values experienced in 2009 were 79%
below values experienced in 2008.
2010 saw a slight rebound in total permit values in the Town of Oliver, fueled by
commercial permits, which comprised 76% of total 2010 values.. Although 2011
experienced a decline in permit values over 2010, permit values were balanced
with commercial permits comprising 32.5% of total values, with residential
comprising 48% of total values.
Development of the Southwinds Crossing shopping centre fueled the commercial
permit values in 2010. The retail centre contains 74,000 square feet at Highway 97
and 340 Avenue. Tenants include Buy-Low Foods, Canadian Tire, Tim Horton's,
Mark's Work Wearhouse and a liquor store.
Oliver experienced a 9-year average of $11.251 million in total building permits,
comprising an average of 6.5% share of the Regional District’s total permit values.
In 2008, Oliver contained 10.0% of the region's total permit values, while in 2003,
Oliver comprised just 2.1% of the region's total permit values.
- 20 -
TABLE 4TOWN OF OLIVER BUILDING PERMITS ($ 000)
Commercial Industrial Institutional Residential Oliver Total
Okanagan-
Similkameen
RD Total
2003 $192 $163 $281 $1,516 $2,152 $102,778
2004 $228 / $4 $4,636 $4,868 $127,743
2005 $427 $5 $143 $13,029 $13,604 $173,976
2006 $761 $210 $6 $18,483 $19,460 $265,224
2007 $220 $176 $145 $13,363 $13,904 $256,506
2008 $831 $120 $116 $23,365 $24,432 $245,044
2009 $765 $120 / $4,228 $5,113 $97,294
2010 $7,782 $465 $19 $2,033 $10,299 $188,408
2011 $2,412 $1,105 $335 $3,576 $7,428 $102,916
Jan-April 2011 $747 / / $998 $1,745 $29,954
Jan-April 2012 $288 / $4 $1,481 $1,773 $38,642
Commercial Industrial Institutional Residential TotalOliver as % of
RD Total
2003 8.9% 7.6% 13.1% 70.4% 100.0% 2.1%
2004 4.7% 0.0% 0.1% 95.2% 100.0% 3.8%
2005 3.1% 0.0% 1.1% 95.8% 100.0% 7.8%
2006 3.9% 1.1% 0.0% 95.0% 100.0% 7.3%
2007 1.6% 1.3% 1.0% 96.1% 100.0% 5.4%
2008 3.4% 0.5% 0.5% 95.6% 100.0% 10.0%
2009 15.0% 2.3% 0.0% 82.7% 100.0% 5.3%
2010 75.6% 4.5% 0.2% 19.7% 100.0% 5.5%
2011 32.5% 14.9% 4.5% 48.1% 100.0% 7.2%
Source: BC Stats, British Columbia Building Permits for Development Regions, Regional Districts, and Communities, by Type
2003-2011, 2012 YTD (June 8, 2012).
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2003 2004 2005 2006 2007 2008 2009 2010 2011
TOWN OF OLIVER BUILDING PERMIT VALUES ($ 000)
Residential
Institutional/Gov't
Industrial
Commercial
- 21 -
2.4.3 TOURISM INDICATORS
The following outlines trends and characteristics in the local and regional
accommodation industry, which is used as one platform to inform the demand
for further hotel accommodations in Oliver.
According to the South Okanagan Tourism Area (SOTA) 2015 Tourism Strategy
conducted in May 2005 by the Tourism Planning Group, the South Okanagan
tourism area generates about 350,000 visitors and an estimated $59 million
annually indirect visitor expenditures. The area encompasses the communities of
Oliver, Osoyoos and the Okanagan Indian Band, and extends from Vaseux Lake
in the north to the U.S. border in the south and comprises the Okanagan River
valley area in between.
The market characteristics of visitors to the area as found in the study includes:
• The summer months attract a large family market
• The niche market visitors, such as those specifically interested in wine
touring, becomes much more apparent in the shoulder seasons
(particularly during the Wine Festival periods in spring and fall)
• The visitation rate declines significantly following Thanksgiving, and is
increasingly dominated by an elderly, long-stay 'snow bird' market from
the prairies. As such, the time period for Room rentals can be for several
months and this market has become the means of maintaining a number
of accommodation facilities in the off-season months
• Sport tourism is growing in the area. The minor hockey association games
are playing a significant role in overnight accommodation in the low
season months
• The Okanagan market is primarily from Western Canada. Visitors tend to
have higher incomes, stay in fixed-roof accommodations and are visiting
for leisure purposes. 41.5% of tourists were from B.C., 25.7% were from
Alberta, 5.9% were from Ontario, 7.4% were from Other Canadian
Provinces, 7.9% were from the U.S., and 11.2% were from Overseas. In
addition, 71.3% of those surveyed were on a leisure trip, while 19.4% were
visiting friends and family, and 4.5% were there for work purposes. The
primary accommodation of those surveyed were resorts
- 22 -
/hotels/motels/B&Bs at 44.7%, while 26.7% were staying at
campgrounds/RV parks, and 20.9% were staying with family/friends.
Please refer to Table 5 for a description of overnight accommodation Room
Revenues, Property Counts and Room Counts; Table 6 for a description of
Revenues Per Room; Table 7 for Hotel Occupancy Rates; and Table 8 for Average
Daily Room Rates in the local and regional accommodation market.
Room Revenues
• Overall, room revenues in the Regional District of Okanagan-Similkameen
have experienced significant growth over the past decade. 2010 room
revenues in the Regional District are a reported 89% above revenues that
were experienced in 2000. This is compared to the Thompson Okanagan,
where 2010 room revenues were a reported 62% above levels experienced
in 2000. Room revenue growth in the Okanagan-Similkameen has
outpaced room revenues in all other Thompson-Okanagan Regional
Districts between 2000 and 2010.
• Between 2000 and 2009, room revenues in Oliver/Okanagan Falls grew by
81%, as compared to a 66% growth in Penticton, 131% growth in Osoyoos,
and a 69% growth in the remainder of the Okanagan-Similkameen
Regional District. As such, it is the wine region of the Regional District
that experienced the highest growth rates (i.e. Oliver and
Osoyoos/Okanagan Falls).
• Oliver and Okanagan Falls comprised an average annual 6% of total room
revenues that were experienced in the Regional District between 2000 and
2009. Penticton contained an average of 52%, Osoyoos comprised an
average of 24%, and the rest of the Regional District comprised an average
of 18% of the Region's total room revenues that were experienced between
2000 and 2009.
- 23 -
Property Counts
• The number of overnight accommodation facilities increased by 6% in the
Thompson Okanagan as a whole (582 properties in 2000, to 616 properties
in 2010), as compared to the Okanagan-Similkameen, where overnight
accommodation facilities increased by 12% (133 properties in 2000, to 149
properties in 2010).
• In the RDOS, BC Stats has recorded 0 hotels containing more than 250
rooms; 1 hotel with 151-250 rooms; and 1 fishing lodge property. The vast
majority of properties in the RDOS are comprised of Motels (85 Motels in
2010, which is down from a high of 101 motels in 2003).
• In the RDOS the Vacation Rental and Miscellaneous categories (guest
ranches, outdoor adventure accommodation; lodges that cater to skiers,
hikers, etc.; bed and breakfasts; houseboats, farms and other
establishments renting rooms) experienced the greatest expansion
between 2000 and 2010.
• In the ten-year period, Oliver/Okanagan Falls comprised an average of 12%
of the overnight accommodation property inventory in the RDOS,
whereas Penticton comprised 36%, Osoyoos comprised 22%, and the
remainder of the Region comprised 30%.
Room Counts
• The number of total rooms in the Thompson Okanagan Region has
increased by 23% between 2000 and 2010 (from 17,701 rooms in 2000, to
21,733 in 2010). The number of rooms in the Okanagan-Similkameen
Regional District has increased by 16% during the same time period (3,754
rooms in 2000, to 4,344 rooms in 2010).
• Over the ten year period, the RDOS comprised on average 20% of the total
room inventory in the Thompson Okanagan as a whole.
• Motel rooms have dominated the market in the RDOS (comprising 45% of
the total room inventory of all overnight accommodation units in the
Regional District in 2010).
- 24 -
• In 2010, hotel rooms comprised 25% of the total Regional District stock
(1,082 hotel rooms), with 563 of such rooms found in hotel properties
containing 76-150 rooms.
• Overnight accommodation rooms classified as Miscellaneous has
experienced a considerable increase in the RDOS, growing from a total of
178 rooms in 2000, up to 979 rooms by 2010.
Revenue Per Room
• 2010 revenues per room in the Okanagan-Similkameen are a reported 64%
higher than revenue per room experienced in 2000.
• When comparing revenue per room by Regional District in the Okanagan,
Central Okanagan has historically dominated with revenue per room
reaching a high in 2008 of $21,035.
• In each Regional District, revenues declined in 2009 over 2008 due to the
global economic crisis. 2010 figures saw mixed results, with revenues per
room continuing to decline in Central Okanagan, North Okanagan and
Columbia-Shuswap, however, revenues per room saw slight increases in
Okanagan-Similkameen, and Thompson-Nicola in 2010 over 2009.
• At the height of the market in 2008, revenues in the RDOS were 84% above
levels experienced in 2000 ($14,394 in 2008, versus $7,810 in 2000). This is
compared to the Thompson-Okanagan as a whole, where revenues had
increased by 50% over the same time-period.
• Similarly when comparing 2010 revenues in the RDOS to revenues
experienced in 2000, the RDOS displays a revenue increase of 64%, as
compared to a 32% increase in the Thompson-Okanagan as a whole.
• When comparing revenues per room by municipality within the RDOS,
Oliver/Okanagan Falls has typically lagged behind Penticton, Osoyoos
and the rest of Okanagan-Similkameen. 2007 and 2008 saw significant
spikes in Oliver/Okanagan Falls, with 2008 revenues per room some 42%
above levels experienced in 2006. This is compared to increases of 18% in
Penticton, 9% in Osoyoos, and 10% in the rest of the Regional District over
the same time-period.
- 25 -
• However, the revenue per room in Oliver/Okanagan Falls experienced a
considerable decline at the height of the recession in 2009, with revenues
declining some 32% over 2008 figures.
• Due to the changes in the modeling estimates for accommodation
properties as a result of the introduction of the HST, revenues for a
portion of municipalities have not yet been analyzed (including
Oliver/Okanagan Falls, and the Rest of Okanagan-Similkameen). The data
that is available displays that 2010 revenues per room in Penticton and
Osoyoos experienced positive characteristics, with revenues increasing in
Penticton (by $132/room) and in Osoyoos (by $935/room) over 2009
values.
- 26 -
TABLE 5REGIONAL TOURISM INDICATORS - TOTAL ROOM REVENUE, PROPERTY COUNTS & ROOM COUNTSTOTAL ROOM REVENUE ($000s) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010THOMPSON OKANAGAN DR 176,101 182,297 196,430 202,760 220,358 236,646 259,729 293,352 298,663 267,704 285,946
OKANAGAN-SIMILKAMEEN RD 29,320 31,729 36,083 37,526 40,291 43,030 48,429 54,733 57,045 53,601 55,516
OLIVER/OKANAGAN FALLS UC 1,748 1,790 1,984 2,305 2,439 2,765 2,889 3,546 3,366 3,158 –
PENTICTON UC 15,213 17,228 19,354 20,151 21,582 22,929 24,985 27,965 28,254 25,320 25,941
OSOYOOS UC 6,784 6,933 8,110 8,080 8,680 9,721 11,141 13,415 15,325 15,681 16,878
REST OF OKANAGAN-SIMILKAMEEN RD 5,576 5,778 6,635 6,989 7,590 7,615 9,413 9,806 10,099 9,442 –
PROPERTY COUNTS 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
THOMPSON OKANAGAN DR 582 590 601 613 614 609 596 592 591 594 616
OKANAGAN-SIMILKAMEEN RD 133 134 138 148 144 146 140 137 137 145 149
Fishing Lodges 1 1 1 1 1 1 1 1 1 1 1
Hotels 16 14 14 13 12 9 11 12 11 12 12
251+ Rooms (H1) – – – – – – – – – – –
151-250 Rooms (H2) 1 1 1 1 1 1 1 1 1 1 1
76-150 Rooms (H3) 5 5 5 5 4 3 5 5 5 5 5
1-75 Rooms (H4) 10 8 8 7 7 5 5 6 5 6 6
Motels 96 96 96 101 97 98 90 84 82 83 85
Vacation Rentals 11 11 14 15 16 18 17 15 17 20 20
Miscellaneous 9 12 13 18 18 20 21 25 26 29 31
OLIVER/OKANAGAN FALLS UC 13 14 14 17 17 17 17 17 16 19 19
PENTICTON UC 51 51 53 58 56 53 50 47 47 48 50
OSOYOOS UC 29 28 29 28 29 32 30 30 33 34 36
REST OF OKANAGAN-SIMILKAMEEN RD 40 41 42 45 42 44 43 43 41 44 44
ROOM COUNTS 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010THOMPSON OKANAGAN DR 17,701 18,031 18,367 18,912 18,931 18,606 19,816 20,051 20,064 20,057 21,733
OKANAGAN-SIMILKAMEEN RD 3,754 3,721 3,827 3,936 3,770 3,704 3,884 3,811 3,963 4,331 4,344
Fishing Lodges 14 14 14 14 14 14 14 14 14 14 14
Hotels 1,190 1,105 1,105 1,057 956 781 998 1,058 1,012 1,082 1,082
251+ Rooms (H1) – – – – – – – – – – –
151-250 Rooms (H2) 204 204 204 204 204 204 204 204 204 204 204
76-150 Rooms (H3) 537 537 537 537 436 346 563 563 563 563 563
1-75 Rooms (H4) 449 364 364 316 316 231 231 291 245 315 315
Motels 2,174 2,202 2,237 2,317 2,285 2,256 2,104 1,987 1,938 1,948 1,969
Vacation Rentals 198 198 243 293 288 314 308 267 367 387 300
Miscellaneous 178 202 228 255 227 339 460 485 632 900 979
OLIVER/OKANAGAN FALLS UC 251 255 255 290 303 296 293 286 240 330 323
PENTICTON UC 2,037 2,048 2,064 2,182 2,004 1,816 1,877 1,796 1,802 1,806 1,833
OSOYOOS UC 806 766 815 767 800 906 863 886 1,092 1,347 1,342
REST OF OKANAGAN-SIMILKAMEEN RD 660 652 693 697 663 686 851 843 829 848 846
Source: BC Statistics, Room Revenue Statistics (April 5, 2011)
Notes:
Vacation Rentals - Includes beach houses, cabins, and selected trailer parks. May also include certain inns & apartment complexes.
Miscellaneous - Includes guest ranches; outfitting, adventure hunting & other types of outdoor adventure; lodges that cater to skiers, hikers, etc. (with the exception of those
lodges that mainly service cabins); bed and breakfasts; and houseboats. Also includes universities, mining firms, farms & other establishments renting rooms whose primary activity
is not accommodation.
- 27 -
TABLE 6REGIONAL TOURISM INDICATORS - REVENUE PER ROOMREVENUE PER ROOM 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010THOMPSON OKANAGAN DR $9,949 $10,110 $10,695 $10,721 $11,640 $12,719 $13,107 $14,630 $14,886 $13,347 $13,157
THOMPSON-NICOLA RD $8,766 $8,644 $8,554 $9,199 $10,214 $10,851 $10,915 $11,513 $12,154 $11,266 $11,835
CENTRAL OKANAGAN RD $14,856 $16,364 $17,231 $15,339 $16,826 $18,564 $18,267 $20,747 $21,035 $17,650 $16,258
NORTH OKANAGAN RD $10,995 $11,097 $11,441 $11,106 $11,886 $13,804 $13,502 $15,268 $15,151 $14,079 $11,605
COLUMBIA-SHUSWAP RD $9,019 $8,352 $9,425 $9,712 $9,855 $10,863 $11,931 $13,502 $13,396 $12,688 $12,587
OKANAGAN-SIMILKAMEEN RD $7,810 $8,527 $9,429 $9,534 $10,687 $11,617 $12,469 $14,362 $14,394 $12,376 $12,780
OLIVER/OKANAGAN FALLS UC $6,964 $7,020 $7,780 $7,948 $8,050 $9,341 $9,860 $12,399 $14,025 $9,570 /
PENTICTON UC $7,468 $8,412 $9,377 $9,235 $10,769 $12,626 $13,311 $15,571 $15,679 $14,020 $14,152
OSOYOOS UC $8,417 $9,051 $9,951 $10,535 $10,850 $10,730 $12,910 $15,141 $14,034 $11,641 $12,577
REST OF OKANAGAN-SIMILKAMEEN RD $8,448 $8,862 $9,574 $10,027 $11,448 $11,101 $11,061 $11,632 $12,182 $11,134 /
Source: BC Statistics, Room Revenue Statistics (April 5, 2011)
Notes:
Vacation Rentals - Includes beach houses, cabins, and selected trailer parks. May also include certain inns & apartment complexes.
Miscellaneous - Includes guest ranches; outfitting, adventure hunting & other types of outdoor adventure; lodges that cater to skiers, hikers, etc. (with the exception of those
lodges that mainly service cabins); bed and breakfasts; and houseboats. Also includes universities, mining firms, farms & other establishments renting rooms whose primary activity
is not accommodation.
* 2010 revenues for Oliver/Okanagan Falls and the Rest of Okanagan-Similkameen have not yet been calculated by BC Stats. This is due to the changes in the modelling estimates for
accommodation properties as a result of the introduction of the HST. As a result, room revenues for a portion of municipalities have not yet been analyzed.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Re
ve
nu
e P
er
Ro
om
OKANAGAN-SIMILKAMEEN BREAKDOWN OF REVENUE PER ROOM (2000 - 2010)
Oliver/Okanagan Falls
Penticton
Osoyoos
Rest of Okanagan-
Similkameen R.D.
$0
$5,000
$10,000
$15,000
$20,000
$25,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Re
ve
nu
e P
er
Ro
om
REVENUE PER ROOM BY REGIONAL DISTRICT (2000-2010)
Okanagan-Similkameen
Thompson-Nicola
Central Okanagan
North Okanagan
Columbia-Shuswap
- 28 -
Hotel occupancy rates and average daily room rates are published by the
Ministry of Jobs, Tourism and Innovation on a monthly basis. The occupancy
rates and average daily room rates are collected for a select number of
Regions/Municipalities. The consultant has displayed data for Penticton and
Kelowna (the closest municipalities to Oliver), as well as data for the Province as
a whole for purpose of investigation.
Hotel Occupancy Rates
• In terms of annual hotel occupancy rates, Penticton has historically lagged
behind Kelowna and the Province as a whole
• Kelowna's annual occupancy rates were generally in-line with provincial
figures between 2003 and 2008. However, in the period from 2009 to 2011,
Kelowna's occupancy rates experienced a greater decline than the
province's rates.
• Penticton's annual occupancy rates have held rather steady over the study
period, ranging from a low of 43.7% in 2003 to a high annual rate of 52.4%
in 2008.
• In terms of hotel occupancy rates by month, 2011 figures display that
Penticton experienced the highest occupancy rates in the height of the
summer months, reaching an occupancy rate of 82.2% in July and 80.1% in
August, as compared to Kelowna (76.9% in July and 75.9% in August) and
the Province as a whole (76.6% in July and 77.4% in August).
• Conversely, Penticton experienced the lowest occupancy rates in every
other month of the year as compared to Kelowna and the Province as a
whole.
- 29 -
TABLE 7HOTEL OCCUPANCY RATES
ANNUAL HOTEL OCCUPANCY RATES (2003-2011 & 1st Quarter 2012)2003 2004 2005 2006 2007 2008 2009 2010 2011 1st Q. 2011 1st Q. 2012
Province of B.C. 58.2% 61.9% 64.6% 65.7% 66.9% 64.5% 58.9% 60.2% 59.7% 50.4% 52.3%
Penticton 43.7% 50.8% 50.9% 51.1% 51.3% 52.4% 47.0% 47.6% 46.7% 28.8% 27.4%
Kelowna 61.5% 61.9% 63.4% 66.6% 65.0% 62.4% 53.3% 51.3% 51.6% 35.7% 37.1%
2011 HOTEL OCCUPANCY RATES BY MONTHJan Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Province of B.C. 43.2% 52.2% 55.7% 56.4% 66.1% 69.4% 76.6% 77.4% 70.3% 55.6% 50.5% 43.9%
Penticton 24.6% 27.3% 34.7% 38.4% 54.9% 57.9% 82.2% 80.1% 61.3% 42.8% 28.3% 25.0%
Kelowna 30.7% 37.1% 39.6% 54.4% 57.7% 58.7% 76.9% 75.9% 65.2% 50.0% 37.9% 31.4%
Source: Tourism BC, Ministry of Jobs, Tourism & Innovation. Research, Planning & Evaluation Tourism Indicators Data Tables.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011
Occ
up
an
cy R
ate
(%
)
Province
Penticton
Kelowna
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Jan Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Occ
up
an
cy R
ate
(%
)
Province
Penticton
Kelowna
- 30 -
Average Daily Room Rates
• In terms of the average annual daily room rates, Penticton has generally
displayed similar characteristics to Kelowna (especially between 2006 and
2011).
• When comparing average daily room rates by month, the results show
similar characteristics to average occupancy rates by month, with
Penticton having the highest daily room rates in the months of July and
August ($159.88 in July and $173.08 in August) as compared to Kelowna
($154.94 in July and $153.56 in August) and the Province ($143.09 in July
and $143.80 in August).
Trends show that the Okanagan generally and Penticton specifically are very
seasonal in terms of occupancy and daily room rates, with extreme highs
experienced in the summer months and extreme lows experienced in the winter
months. In the Southern Okanagan, the traditional summer market sustains the
industry, with off-season accommodation supported by snowbirds and sports
events (hockey, curling, etc.) in the winter seasons, and wine tourists in the
spring and fall seasons.
- 31 -
TABLE 8AVERAGE DAILY ROOM RATE
AVERAGE ANNUAL DAILY ROOM RATE2003 2004 2005 2006 2007 2008 2009 2010 2011 1st Q. 2011 1st Q. 2012
Province of B.C. $114.64 $118.90 $118.26 $124.73 $129.96 $134.48 $129.58 $138.42 $130.35 $121.22 $123.53
% Chg 3.7% -0.5% 5.5% 4.2% 3.5% -3.6% 6.8% -5.8% 1.9%
Penticton $94.63 $110.11 $111.72 $111.85 $120.68 $124.30 $125.90 $121.90 $119.44 $83.37 $80.54
% Chg 16.4% 1.5% 0.1% 7.9% 3.0% 1.3% -3.2% -2.0% -3.4%
Kelowna $100.10 $103.21 $104.38 $114.96 $121.11 $126.36 $123.44 $123.14 $124.42 $96.96 $96.27
% Chg 3.1% 1.1% 10.1% 5.3% 4.3% -2.3% -0.2% 1.0% -0.7%
2011 AVERAGE DAILY ROOM RATES BY MONTHJan. Feb. March April May June July August Sept. Oct. Nov. Dec.
Province of B.C. $120.73 $122.61 $120.42 $119.91 $138.39 $138.08 $143.09 $143.80 $136.24 $117.95 $117.29 $124.16
Penticton $78.80 $85.51 $85.40 $95.32 $114.72 $124.57 $159.88 $173.08 $116.22 $92.58 $81.21 $80.55
Kelowna $95.16 $100.14 $97.91 $106.76 $124.82 $129.47 $154.94 $153.56 $137.89 $110.02 $98.91 $95.07
Source: Tourism BC, Ministry of Jobs, Tourism & Innovation. Research, Planning & Evaluation Tourism Indicators Data Tables.
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
$130.00
$140.00
$150.00
2003 2004 2005 2006 2007 2008 2009 2010 2011
Province
Penticton
Kelowna
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
$130.00
$140.00
$150.00
$160.00
$170.00
$180.00
Jan. Feb. March April May June July August Sept. Oct. Nov. Dec.
Province
Penticton
Kelowna
- 32 -
3.0 HOTEL/RESORT INDUSTRY OVERVIEW
This section of the report is meant to serve as a guide, outlining not only the past
and future trends of the hotel/resort industry, but of the leisure industry in its
entirety. In this regard, the overview will explore the types of travelers, the types
of product, the types of activities and the supporting amenities as they exist in the
global, national and regional market. Further, this overview will explore the
emerging trends in these areas, and the implications of such on future leisure
market pursuits.
3.1 CURRENT LEISURE MARKET TRENDS
Although changes to the leisure and resort industry have been numerous and
varied across both North America and the world, several trends have begun to
define the current state of the leisure industry. These include:
� Substantial demographic shifts
� Increased domestic travel
� Changing nature of travel in North America
� Increasingly informed, savvy and price sensitive consumers
� Consolidation within the resort industry
Each of these trends will be explored in turn.
Demographic Shifts:8
Within both North America and the world, an increasing proportion of the
population is at or nearing retirement. Known as the “baby-boomer” population,
or those born between the years 1946 and 1965, this “bulge” in the population
profile of the world is a visibly noticeable group. For example, as of 2006, those
8 Trends in Tourism, L. Moutinho, 2000;
Statistics Canada Travel Log, Vol. 22, Num. 4, Summer 2004, Julia Marcoux.
- 33 -
between the ages of 50 and 69 have come to represent 22.3% of the Canadian
population versus 20.3% in 2001. This trend is consistent across the globe, where
those in this age bracket grew from 12.9% of the population in 1996 to 14.7% in
2006. Indeed, the mature market of Europeans (those between the ages of 55 and
65) surpassed 100 million people in 2000.
Figure 3 displays the age pyramid of the Canadian population in 2006. On it is
represented five large cohorts: the parents of the baby-boomers, born between
1922 and 1938, the Second World War cohort, born between 1939 and 1945, the
baby-boom cohort, born between 1946 and 1965, the baby-bust cohort, born
between 1966 and 1974 and the children of the baby-boom cohort, born between
1975 and 1995.
The census indicates that nearly one out of three Canadians was a baby-boomer
in 2006. Besides the Baby-boomer category, the cohort of the baby-boomers’
children is also evident on the age pyramid. This group of people, born between
1975 and 1995 and who were between 11 and 31 years in 2006 represented 27.5
percent of all Canadians according to the 2006 census.
FIGURE 3DIFFERENT COHORTS AMONG THE AGE PYRAMID OF THE CANADIAN POPULATION IN 2006
Source: Statistics Canada, Census of Population (2006).
- 34 -
The baby-boomers have and will play the most significant role in determining
future trends within the industry, owing to the affluence and size of the
population. With a maturing educated travel market, culture and heritage travel
are becoming increasingly popular. Baby-boomers with high disposable incomes
are looking for destinations which provide unique activities and experiences and
consequently, will provide a steady source of revenue for resorts over the next
decade.
Increasing Domestic Travel9:
Due to the economic downturn, health and security concerns, as well as
appreciation of the Canadian dollar, travel (particularly of Americans) has
shifted towards increased domestic trips. In 1972, the first year for which data is
available, US travelers accounted for 94% of total international traffic through
B.C. By 2009, that share had dropped to 77% of total entries. The data indicates
that since 2000, the volume of visitor entries from the U.S. has decreased
substantially, while non-U.S. entries have increased considerably. 2010 saw a
slight growth (1.8%) of U.S. overnight visitors to B.C. over 2009, however 2011
data depicted that compared to the previous year, entries from the U.S. were
down 4.7% as a result of a decline in the number of same day (-9.8%) and
overnight (-2.1%) travellers arriving in B.C.
Canadians have also seen an increase towards domestic travel. More than ever,
the travel motivations of Canadians are being reflected in their desire for
cleanliness, good weather and safety. In 2009, visitors from Canada accounted for
nearly 11 million travelers in B.C., corresponding to a 7% increase from 2008. Of
travelers from Canada, B.C. residents made up the largest share of visitor volume
(72%) and expenditures (53%) in 2009. Alberta was the second largest domestic
market of overnight visitors to B.C., with one-fifth of the Canadian visitor
volume and 27% of expenditures.
Conversely, recent data shows that Canadian trips to the United States have
increased (largely due to the higher duty-free exemptions that were enacted on
June 1, 2012). Canadians made a record 1.9 million overnight trips to the U.S. in
9 BC Stats, Tourism Sector MonitorJanuary 2011 Special Focus: Non-US Entries to BC (February 3,
2011);
Vancouver Sun, Retail Sales Drop Unexpectedly in June while Cross Border Trips Soar (August 23, 2012);
Tourism BC, The Value of Tourism in British Columbia Trends from 1999 to 2009 (April 2011).
- 35 -
June. Most overnight travel was by car, with Canadian trips increasing 10
percent month over month, at 1.2 million trips.
Changing Nature of Travel in North America10:
Several trends have emerged, owing primarily to changes in workplace habits.
Due to innovations in telecommunications (internet based work) and changes in
workplace organization, new forms of work time (flextime, job-splitting, job
sharing) and holiday time (individual arrangements for both holiday and
pension plans) have emerged.
The result has been a blurring between leisure and work time, which has caused:
• A reduction in the length of main holidays;
• Growth in additional breaks, especially “extended travel weekends”, and;
• Growth in short-haul as opposed to long-haul travel.
In general, an increase in leisure time has become evident in the developed
world, owing to improved working conditions and legislated (or non-legislated)
shorter work weeks.
Lastly, a greater emphasis is placed on individual/self-determined holidays, as
well as on active, educational and cultural (or special interest) holidays.
Increasingly Informed, Savvy and Price Sensitive Consumers:
With the proliferation of tourist offerings across the globe, the leisure industry
has increasingly become a “buyers market”. This fact has been exacerbated
through the internet, which has made product and price checking simple and
convenient. The result has been a huge increase in price-sensitivity among
consumers.
Beyond this, the population of experienced travellers has grown considerably in
the past two or three decades, which has increased the sophistication and
selectiveness of demand, particularly within the baby-boomer segment.
10
Trends in Tourism, L. Moutinho, 2000.
- 36 -
Consolidation within the Resort Industry:
Although there has been a proliferation in independent, entrepreneurial
recreation and leisure services catering to “off-the-beaten track” travellers or
sophisticated and wealthy tourists, the overwhelming trend in the industry has
been towards consolidation and standardization of resort developments and
management by large regional, national and global corporations.
Not only has the hospitality industry been assembled under a few major players
(such as Westmont Hospitality Group, which owns and operates over 300 hotels
in North America and Europe), but the resort industry has seen players such as
Intrawest (which owns 14 resorts across North America and Europe) and Resorts
of the Canadian Rockies (which operates Lake Louise, Fernie, Kimberley and
Nakiska, just to name a few) come to dominate resort offerings in specific
markets such as skiing.
This trend has also seen a movement towards “full-service” resorts, in which
virtually all retail, food & beverage and general amenities within a resort have
come to be owned and operated by the parent company. This trend has seen a
considerable loss of diversity among resort offerings, as all facets of the operation
are standardized and vertically integrated.
3.2 FUTURE LEISURE MARKET TRENDS
This section serves to identify the key trends which will likely shape the form
this market will take for the next 10+ years. Specifically, these include:
� The baby-boomer population
� A movement towards four season, recreational pursuits
� The growth of destination resort developments
� Increasing demand for less physically demanding leisure activities
� Changing consumer preferences towards customizable tourism products
and experiences
� The influence of family over travel and purchasing decisions
� Trend towards second home purchases
� The inclusion of Spa and Wellness facilities in resort offerings
- 37 -
� The inclusion of business compatible amenities
� Proliferation of alternative ownership/rental structures
Again, these trends will be explored in turn.
The Baby-Boomer Population:11
As was discussed previously, the influence of the “baby-boomer” segment over
the leisure industry cannot be underestimated. Within Canada, the proportion of
50 to 69 year olds within the total population is projected to grow from a current
level of 22.3% to 26.1% by 2026.
The significance of this group is emphasized by several important observations.
Firstly, baby-boomers are beginning to utilize the enormous built-up equity they
hold in primary homes, to travel or purchase recreation property. Secondly, the
baby-boomer population typically has dual sources of income, and will be the
first generation to retire with dual pensions. Lastly, and perhaps most significant,
American baby-boomers are expected to inherit $14 trillion in assets; the largest
transfer of wealth in history.
Statistics Canada states that the prevalence of high income peaks in the pre-
retirement years. In 2004, individuals aged 45 to 64 accounted for less than a
third of all income receipts (33%), but were the majority in the top 5% (54%). In
the top 0.01%, those aged 45 to 64 accounted for 3 in 5 high-income individuals.
Individuals aged 25 to 44 years were the second largest group of high-income
recipients in the top 5%, but seniors (23%) were second in the top 0.01%.
Needless to say, these factors will be very favourable for those in the leisure
industry.
A Movement towards Four Season, Recreational Pursuits:
Arguably, the largest trend within the hospitality industry is the movement
towards all-season (or four season) accommodations.
Overall, both resorts and destination hotels are attempting to broaden the depth
of their experience by offering golf, nature-based activities, agricultural tourism,
11
Statistics Canada, Perspectives on Labour and Income (September 2007);
Lestor Thurow, MIT Economist.
- 38 -
spa and wellness facilities, increased retail offerings and additional services and
amenities, all in an attempt to reduce the seasonal fluctuations in tourist flows,
and to better match the preferences of their customers. As is shown in Figure 4, a
recent survey of B.C. and non-B.C. residents shows just how broad and varied
interests can be in outdoor activities. Fourteen different outdoor (non-winter)
activities were indicated as being of interest for at least 20% of the population.
FIGURE 4OUTDOORS (NON-WINTER) ACTIVITIES IN BCINCLUDES BC RESIDENTS AND VISITORS FROM OTHER PROVINCES
2000 2026
Population 1,800,000 2,100,000
Hiking/backpacking 67% 65%
Wildlife viewing 57% 58%
Cycling 49% 48%
Kayaking or canoeing 48% 47%
Fishing 47% 47%
Wilderness camping 45% 43%
Motor boating 43% 42%
Golfing 36% 34%
Wildflower viewing 33% 36%
Alpine skiing 33% 31%
Whale watching 28% 28%
Horseback riding 24% 23%
Cross-country skiing 22% 22%
White water rafting 20% 18%
Bird watching 18% 20%
Sailing 16% 18%
Rock climbing 11% 10%
Snow-mobiling 11% 9%
Scuba diving 11% 12%
Motorcycling 10% 10%
Snow-boarding 10% 9%
Wind surfing 9% 8%
Hunting 9% 8%
Hot air ballooning 1% 1%
Source:
Tourism BC
0 0.2 0.4 0.6 0.8
Hot air ballooning
Wind surfing
Hunting1
Snow-boarding1
Motorcycling
Snow-mobiling1
Scuba diving
Rock climbing
Sailing
Bird watching
White water rafting
Cross-country skiing
Horseback riding
Whale watching
Wildflower viewing
Alpine skiing
Golfing
Motor boating
Wilderness camping
Fishing
Kayaking or canoeing
Cycling
Wildlife viewing
Hiking/backpacking
2000
- 39 -
Increasing Demand for less Physically Demanding Activities:
As the population ages, leisure activities which require a lower level of physical
exertion are expected to increase at higher rates than the total domestic tourism
market12. Consequently, interest in heritage and cultural tourist activities such as
First Nations experiences, “farm tourism”, winery tours and ecotourism have
been growing and are expected to continue expanding. Instead of a need for ski
facilities, many retirees would prefer easy access to fishing, bird watching, etc.
The Inclusion of Spa and Wellness Facilities in Hotel/Resort Offerings:
The inclusion of spa facilities, within predominately resorts and upscale hotels,
has gone beyond being simply a luxury, to become a standard amenity expected
by clients. The result has been a “spa war” in which product differentiation is
subtle and the competitive edge very thin.
Again, this trend is being driven by the aging baby boomer population, which
has seen the spa industry move from beauty/pampering to complete wellness
models with mediation, yoga, and alternative medicine techniques.
As a result, the trend towards medical tourism, which is being manifested
through destination medical spas (which focus entirely on personal health), will
remain a dominant force in the leisure industry for years to come. To supplement
the sales productivity in spa facilities, a greater percentage of floor area is being
devoted to retail offerings, which assist in increasing sales per square foot while
simultaneously building on a spa’s brand or line of products.
The Inclusion of Business Compatible Amenities:
Hotel/resort offerings are no longer strictly used for leisure activities.
Increasingly, owners and renters alike have begun to utilize leisure facilities for
business conferences or to entertain clients. As such, the desired amenities in a
hotel/resort have changed to include board room facilities or dedicated office
space.
Consistent with this trend, network connectivity has come to be expected within
a hotel/resort. Dedicated LAN internet connections are a common appearance in
12
Opportunities for B.C.: Activity-Based Tourists in Canada, Tourism B.C., 2004
- 40 -
virtually all suites and rooms, while the most recent hotels/resorts offer full
wireless capabilities. As the lines between business and pleasure become
increasingly blurred, this trend can be expected to only continue into the future.
- 41 -
4.0 TOURISM ACTIVITY TRENDS
The following undertakes a review of tourism trends relevant to the Oliver
region. Increasingly, the link between traditional tourism and outdoor recreation
is getting stronger as is profiled in Section 3. Additional specialty market niches
that are profiled include wine tourism, cultural tourism, spa and wellness
tourism, and related tourism niches including aboriginal tourism, eco-adventure
tourism, agritourism, and culinary tourism.
4.1 WINE TOURISM TRENDS13
Wine tourism is expanding in most major wine growing regions around the
world, and is linked with culinary, eco- and agri-tourism. Wine education centres,
hotels, restaurants, wine trails and other components which highlight the
industry are examples of the infrastructure that surrounds wine tourism.
Between 1999 and 2008, the B.C. wine industry has experienced significant
growth. The volume of both harvesting and production more than doubled and
the number of wineries tripled. It is anticipated that wine and culinary tourism
will grow by 50% in B.C. between 2005 and 2015. The Okanagan wineries supply
approximately 90% of the province's wine production.
According to a 2004 study by Tourism British Columbia on Activity-Based
Tourists in Canada, the B.C. resident market for Wine/Culinary Tourists -
defined as those who tour wineries, dine at internationally acclaimed restaurants
and/or go to cooking or wine tasting schools when on trips - is expected to grow
by 50% over the next two decades, increasing from 284,000 now to 427,000 by
2026. The 2004 study identified that B.C. attracted approximately 146,000
Wine/Culinary Tourists over a two-year period from Ontario. This number is
expected to grow to 237,000 by 2026. B.C. has also attracted approximately 1.4
million wine/culinary tourists over a two-year period from the U.S. This number
13
Tourism British Columbia, Wine Tourism Product Building Tourism With Insight (October, 2009);
Tourism British Colubmia, Research and Planning, Okanagan Valley Wine Consumer Research Study
2008 Results (Summer, 2009);
Agriculture and Agri-Food Canada, The Canadian Wine Industry (June, 2012);
Tourism British Columbia, Opportunities for British Columbia: Activity-Based Tourists in Canada
(August, 2004).
- 42 -
is expected to rise to 2.3 million by 2025. The province is particularly attractive to
wine/culinary tourists from Seattle due to its close geographic proximity.
Tourism British Columbia undertook an examination of the Okanagan Valley
Wine Consumer in 2008. The purpose was to develop a profile of travelers who
visited Okanagan Valley wineries in terms of traveler and trip characteristics.
Visitors were surveyed at seven wineries throughout the Okanagan Valley,
including two in Oliver. The wineries included:
• Tinhorn Creek Vineyards (Oliver)
• Burrowing Owl Estate Winery (Mid-point between Oliver and Osoyoos)
• Nk'Mip Cellars (Osoyoos)
• Soaring Eagle Estate Winery (Penticton)
• Elephant Island (Naramata)
• Mission Hill Family Estates (West Kelowna)
• Cedar Creek Estate Winery (Kelowna)
Important findings relevant to the Oliver Hotel Study include:
• Of all participants visiting wineries, over half (59%) were from B.C.
(including those from the local area). The majority of B.C. residents came
from Metro Vancouver/Fraser Valley area (54%), while an additional 25%
of residents were from the Okanagan Valley. Exploring specific origin of
B.C. residents by travel group revealed that those from Metro
Vancouver/Fraser Valley represented nearly three quarters (74%) of
independent travelers, 63% of tour group participants, and 66% of
business travelers.
• Residents of Alberta comprised 21% of those intercepted at the wineries,
with over half (54%) of all Albertans coming from Calgary and area. Those
from Edmonton comprised 26% of all Alberta residents.
• 43% of all those Canadian provinces other than B.C. and Alberta were
from Ontario, with an additional 34% from Saskatchewan and Manitoba.
- 43 -
• In total, residents of the U.S. comprised 4% of those intercepted for the
survey. The largest group of residents were from Washington (44%).
Residents of Washington represented 38% of all independent leisure
travelers from the U.S. and 69% of all business travelers from the U.S.
Residents of California made up the next largest group with 16% of all
survey participants from the U.S. An additional 27% of U.S. visitors were
from states other than Washington or California.
• Those from other International countries comprised an additional 4% of
the total sample of residents visiting wineries, with residents of European
nations representing 71% of all other International winery visitors, and
those from Asia-Pacific countries representing 20%. More than half of all
European independent leisure travelers were from the United Kingdom,
and nearly half (47%) of all independent leisure travelers from the Asia
Pacific region were from Australia.
• Strictly examining independent, leisure travelers, 51% of such travelers
were from B.C., whereas 26% were from Alberta, 13% from elsewhere in
Canada, 5% from the U.S., and 5% from other countries.
• Strictly examining business travelers, 68% of such travelers were from B.C.
(45% from Metro Vancouver/Fraser Valley), whereas 4% were from
Alberta, 14% from elsewhere in Canada, 12% from the U.S., and 3% from
other International countries.
- 44 -
• The majority of travelers in the Okanagan Valley wineries were between
the ages of 35 to 64 years with the most frequently stated age category
being 45 to 54 years of age (27%).
• 52% of respondents had annual household incomes of at least $100,000
and another 25% had incomes between $65,000 and $99,000.
• 79% indicated that this was not their first time wine touring.
TABLE 9ORIGIN OF ALL SURVEY PARTICIPANTS BY TRAVELLER GROUP
Source: Tourism British Columbia Research & Planning, Okanagan Valley Wine Consumer Research Study 2008 Results (Summer, 2009).
- 45 -
• The majority were travelling for leisure purposes (72%), 27% were
travelling to visit friends and family, while 1% were visiting for other
purposes.
• High interest wine travelers were more likely travelling for leisure
purposes (81%) as opposed to visiting family and friends (19%). They
were also more likely to stay at Resort/Hotel/Motel/B&B's (58%) as
compared to low interest wine travelers.
• 50% of wine travelers were staying in traditional fixed roof
accommodations (Hotel/Motel/Resort/B&B's) and 25% were staying
with family and friends. Less than a fifth (16%) were staying at a
campground/RV park. 8% were staying at non-traditional types of
accommodations such as second homes/rental homes/timeshares.
• The average party size was 2.8 people and 14% of wine travelers were
travelling with children. Those parties with children had an average of 4.6
people travelling in their group. Parties travelling without children had an
average travel party size of 2.6 people.
• On average, wine travelers intended to visit a total of 9 wineries during
their trip averaging 3.5 wineries on the actual interview day. High interest
wine travelers were more likely to visit more wineries in total (11.7) and
also more wineries in the Okanagan Valley (9.4) and per day (4.3).
• In terms of other leisure activities travelers participated in (results of a
follow-up survey), 68% visited a farmer's market, 64% drove a wine trail,
and 59% participated in fine dining, with 53% experiencing local or
regional cuisine. Respondents also indicated shopping for local arts and
crafts (54%), participating beach activities (43%), dining (70%), and
swimming (53%) as popular trip activities.
• High interest wine travelers were 'very likely' to take another trip to the
Okanagan to visit wineries (79%, very likely).
• Travelers at the wineries spent an average of $304.99 per party per day.
High interest wine travelers reported considerably higher per diem
expenditures then low interest wine travelers ($356.71 and $243.62,
respectively).
- 46 -
A 2006 Travel Activities and Motivations study undertaken by Tourism British
Columbia found that the most popular travel activities (outdoor and cultural)
that wine travelers to B.C. also participated in included cultural activities such as
strolling to see city buildings and historic sites/buildings and well-known
natural wonders. Sunbathing/sitting on a beach and swimming in lakes and
oceans were the most popular outdoor activities for wine travelers. Hiking, golf
and downhill skiing were the most common complementary sports-related
outdoor activities of interest to wine travelers. See Table 10 below.
TABLE 10OTHER OUTDOOR & CULTURAL ACTIVITIES PARTICIPATED IN BY WINE TOURISM TRAVELLERS
Source: Tourism British Columbia, Wine Tourism Product Building Tourism With Insight (October 2009).
- 47 -
4.2 CULTURAL TOURISM TRENDS14
Building upon the wine tourism trends, a 2004 study undertaken by Tourism
British Columbia examined the profile of visitors to the Okanagan Valley, and
focused on cultural tourist trends. Cultural attractions were defined to include:
museums, art galleries, artist studios, historic sites and heritage attractions, arts
events and cultural festivals, First Nations cultural attractions, wineries, open
farms and orchards and, food processors and chefs.
Relevant findings include:
• Of those surveyed, almost two-fifths (37%) were classified as "Cultural Tourists". Significantly more cultural travelers visited wineries (55%)
compared to tourist sites (34%) and Visitor Information Centre's (22%).
• Of those surveyed, 45% of visitors to the Okanagan Valley used a resort/hotel/motel/B&B for overnight accommodation. This was
especially true for winery visitors (50%). A significantly higher proportion
of Visitor Information Centre respondents (37%) used a campground/RV
park compared to tourist site (23%) and winery visitors (23%).
• Popular activities (i.e. having participation rates of 50% or higher) included swim/other water based activities (75%), visiting a
farm/farmers market/orchard/food processor (75%), shopping (66%),
and nature-based activities (64%).
According to the ‘AtBC Blueprint Strategy: Tourism Performance Review 2006-
2010’, B.C.’s aboriginal tourism sector has been surging, with approximately 200
aboriginal tourism businesses in B.C. that are thriving despite the economic
downturn that hit the tourism industry particularly hard. It has been reported
that nearly ¼ of the 200 businesses were established between 2006 and 2010,
thereby exceeding expectations in job creation and economic impact and almost
doubling the number of visitors to aboriginal cultural attractions.
Important findings from the report reveal that:
14
Tourism British Columbia, Research Services, A profile of Visitors to British Columbia's Okanagan
Valley: Focus on Cultural Tourists (January, 2004);
AtBC Blueprint Strategy Tourism Performance Review 2006-2010 (May 2011).
- 48 -
• Around 3.7 million tourists experienced some form of aboriginal cultural
tourism in 2010, almost double the number from 2006.
• The overall incidence of travelers in B.C. involved with aboriginal tourism
attractions/products/services increased from around 13 percent in 2006,
to an estimated 22 percent in 2010.
• Tourist interest in aboriginal culture is strong in the majority of Canada’s
key international markets, with interest high among potential Chinese
travelers and lowest among Americans.
• An estimated 2,226 full-time equivalent jobs were generated by aboriginal
businesses in 2010, a 32 percent increase from 2006.
• Aboriginal tourism revenues reached $40 million in 2010, double that of
2006.
• The 2010 Winter Olympic Games and its corresponding media exposure
have helped to propel the levels of aboriginal tourism marketing. In fact, it
is estimated that by 2012, about 3.9 million visitors to B.C. will participate
in aboriginal cultural tourism experiences and spend about $43 million.
- 49 -
4.3 OUTDOOR ACTIVITY TRENDS15
This section explores the range of outdoor/heritage-oriented activities that are
typically frequented by many Canadians, and which are activities that could be
offered and promoted at an Oliver hotel.
According to a report prepared for the Canadian Tourism Commission, ‘Soft
Outdoor Adventure Enthusiasts’ are defined as those who have taken leisure
trips in Canada and, in many cases, to other destinations in the past couple of
years, and have included at least two of the following activities:
• Biking
• Kayaking/canoeing
• Sailing
• Motor Boating
• Motorcycling
• Wind Surfing
• Hiking/Backpacking
• Horseback Riding
• Hot Air Ballooning
• Cross-Country Skiing
• Downhill Skiing
• Snowboarding
It has been identified that of the 23.3 million Canadian adults in 2000, about 5.3
million are Soft Outdoor Adventure Enthusiasts. Of these, around 8 in 10 state to
have visited a Canadian destination on a leisure trip within the past 2 years. As
15
Kwantes, James. Vancouver Sun. Sport Fishery Going Strong After A Slow Start to Season (August 16,
2011);
BC Stats, British Columbia’s Hunting, Trapping & Wildlife Viewing Sector (August 2005);
Research Resolutions & Consulting Ltd., prepared for The Canadian Tourism Commission (CTC),
Canadian Soft Outdoor Adventure Enthusiasts A special Analysis of the Travel Activities and Motivation
Survey (TAMS);
Canadian Ski Council, National Consumer Satisfaction and Profile Study 2009/10 (August 2010);
Lang Research, Travel Activities and Motivation Survey (TAMS), Aboriginal Tourism Interest Index
(2000).
- 50 -
such, the domestic market for the soft outdoor adventure segment is around 4.4
million Canadian adults. British Columbia has been identified as a province that
is successful at attracting Soft Outdoor Adventure Enthusiasts.
The majority of Soft Outdoor Adventure Enthusiasts live in adult-only
households (61 percent), and nearly three-quarters of them are between 18 and
44 years of age.
In terms of income, it has been recorded that Soft Outdoor Adventure
Enthusiasts are more affluent than is the “typical” domestic traveler in Canada.
In terms of activities, the most popular outdoor activities tend to be warm
weather encounters with nature.
The following displays those activities engaged in by 30 percent to 60 percent of
Soft Outdoor Adventure Enthusiasts:
• Hiking/Backpacking in wilderness settings (58%)
• Wildlife Viewing (47%)
• Fishing (46%)
• Cycling (38%)
• Kayaking or Canoeing (37%)
• Motor Boating (37%)
• Golfing (34%)
• Wildflowers Viewing (32%)
Nearly half of Soft Outdoor Adventure Enthusiasts fish in fresh or salt water on
their trips (46%) and almost two-fifths go motor boating (37%). Placing this
activity in a B.C. context, recent data indicates that the number of B.C. fishing
licenses sold to non-residents rose 10 percent (to 8,635) from April 1 to July 26,
2011 compared to the same period in 2010. The number of fishing licenses sold to
B.C. residents also rose, 7.5 percent to 104,795. According to the Sport Fishing
Institute of B.C., the recreational fishery accounts for approximately 39 percent of
total revenues and GDP for all B.C. fishing and aquaculture.
Activities engaged in by 10 to 30 percent of Soft Outdoor Adventure Enthusiasts
include:
- 51 -
• Downhill Skiing (28%)
• Bird Watching (22%)
• Cross-Country Skiing (22%)
• Snowmobiling (19%)
• Horseback Riding (18%)
• Ice Fishing (14%)
• Sailing (13%)
• Hunting (11%)
• Motorcycling (10%)
• Whale Watching (25%)
As observed, downhill skiing and cross-country skiing are popular activities
enjoyed by Canadians. The following provides statistical information regarding
the profile of Canadian skiers and snowboarders, as reported within the
2009/2010 Canadian Ski Council’s National Consumer Satisfaction and Profile
Study. The average age for the 2009/2010 season was 37 years old, with 55
percent male skiers and 45 percent female skiers. The average skier/rider
household income is a higher-than-average $96,334. Resorts in B.C. and Yukon
continue to experience the most diverse geographic draw – most of their visitors
were from B.C. (54.5 percent), however an additional 31.3 percent of visitation
was drawn from foreign countries and the U.S., 7.1 percent was from the Alberta
and Prairies region, 5.9 percent was from Ontario, 0.8 percent from Quebec, and
0.4 percent from the Atlantic provinces.
In terms of the future market for soft outdoor adventure activities, it is reported
that between 2000 and 2026, there will be an estimated 700,000 person increase in
Soft Outdoor Adventure Enthusiasts (5.3 million increasing to about 6.0 million).
It is believed that the impacts of an aging population will result in a shift away
from more strenuous outdoor activities and a corresponding shift toward non-
strenuous warm weather outdoor activities and indoor cultural events and
attractions. A strategy that offers activities of varying levels of physical exertion
is recommended, so as to attract the action-oriented youth and family markets, as
well as the increasing number of older Canadians that may wish for a ‘gentler’
outdoor experience.
- 52 -
In terms of heritage activities, farmers fairs/markets, “pick your
own“ farms/harvesting, historic sites, and aboriginal celebrations/attractions are
widely sought by Soft Outdoor Adventure Enthusiasts. As many aboriginal
tourism experiences take place in natural settings, there may be some synergy
between the outdoor segment’s interest in canoeing, kayaking, fishing, hiking
and backpacking and aboriginal cultural experiences. In fact, according to the
‘Travel Activities and Motivation Survey (TAMS) Aboriginal Tourism Interest
Index’, those who participated in aboriginal tourism were more likely to have
participated in natural sightseeing and nature-oriented attractions.
Overall, Soft Outdoor Enthusiasts continue to rate Canada high in terms of its
attributes that support an ‘outdoors’ image. The Oliver area offers many of these
desired attributes including:
• A place with beautiful scenery
• One of the best destinations for outdoor activities
• A great place to relax and get away from it all
• A great place to go for fishing
• A place with lots of things for mature adults to see and do
• A place with lots of things for families to see and do
• A great summer destination
• A place that is very clean and well cared for, and is safe for visitors
• A place that offers adventure and excitement
- 53 -
4.4 SPA & WELLNESS TOURISM
The following provides a description of resort/hotel spas in Canada, and places
a particular focus on B.C.:
The two largest segments (day spas and resort/hotel spas) in the industry
accounted for 88% of the industry’s total revenue in 2005. Resort/hotel spas are
emerging as the dominant players in the industry. Moreover, they account for
only 19% of the spa locations in Canada, but amassed one quarter (24%) of the
industry’s revenues for 2005. In other words, resort/hotel spas earn more per spa
than day spas. Revenues for medical spas sit at 2% of the industry which is
roughly equal to their share of locations while the portion of revenues
attributable to other spa types is quite a bit higher than their share of locations.
• Day ($654 million) 64%
• Resort/Hotel ($245 million) 24%
• Medical ($22 million) 2%
• Other ($103 million) 10%
Despite having a disproportionately high share of industry revenue, resort/hotel
spas have a disproportionately small share of industry visits. In other words,
they see fewer clients on average but generate significantly more revenue per
client.
Not surprisingly, resort/hotel spas have a greater reliance on tourists. Two
thirds of resort/hotel spa visits originate from outside the local market (outside
of 80km from the spa). In addition to the 39% from other parts of Canada, a
significant portion of the resort/hotel spa tourists are from the U.S (18% of visits).
However, resort/hotel spas still have a significant reliance on locals for one third
of visits (37%). Given that a greater portion of spas in Quebec and British
Columbia are tourism-oriented (28% of spas are tourism-oriented in B.C.), it is
not surprising that these are the provinces with the highest proportion of visits
from tourists.
- 54 -
5.0 AREA ASSESSMENT
This section reviews the physical, locational and demographic characteristics of
the subject area. An examination of access characteristics, demographic profiles
of the local and regional population, along with specific intrinsic qualities of
Oliver have been provided.
5.1 TRANSPORTATION16
The Town of Oliver is located approximately 33 kilometres south of Penticton
and 19 kilometres north of Osoyoos on Highway 97, a major north-south
highway that runs from California to Alaska. Oliver is also approximately 21
kilometres north of the U.S. border crossing at Osoyoos, which is also the
junction with Highway 3 - a popular route east to Calgary and west to
Vancouver (please refer to Figure 2 in Section 2).
Studies conducted by the Ministry of Transportation and Infrastructure show
that Highway 97 is used by a variety of vehicles including commercial, large
transport trucks delivering goods to/from the Southern Okanagan and into/out
of the U.S. Traffic along Highway 97 in the summer months is considerably
higher than in other months of the year, as discussed below.
Along Highway 97, running from Junction Route 3 (Osoyoos) to Road 2 (338th
Avenue) in Oliver, just south of the Town Centre, annual average daily traffic
volumes in 2009 were calculated by the Ministry of Transportation and
Infrastructure to be 7,216. This is compared to summer average daily traffic
volumes, which were calculated at 10,172 in 2009, representing a 40% increase in
the summer over the annual average daily volumes.
Similarly, average daily traffic counts along Highway 97 running from Leighton
Crescent (just north of the Oliver Town Centre) to Green Lake Road (in
Okanagan Falls), displayed an annual average daily traffic volume of 6,299 in
2011, with an average daily traffic volume in the summer of 8,543, representing a
16
Cornerstone Planning Group, Town of Oliver Strategic Planning Project, Oliver Airport Strategic Plan
(May, 2012);
Oliver British Columbia, The Wine Capital of Canada
- 55 -
36% increase. 2011 summer average daily volumes in 2011 were the highest
recorded summer volumes over the previous 9 years.
Please refer to Table 11, for the Ministry of Transportation and Infrastructure’s 10
year summary data for 2011.
Greyhound Canada buses stop in Oliver and provide multiple daily connections
with Vancouver and Calgary, as well as regional centres.
Car rentals are currently not available in Oliver. The closest car rental agencies
are located in Penticton.
In terms of air travel, the Penticton Regional Airport (situated 40 kilometres
north) offers daily flights to and from Vancouver on Air Canada Jazz. In addition,
Kelowna International Airport (situated 102 kilometres north) offers multiple
daily flights to and from Vancouver, Victoria, Calgary, Edmonton and Seattle, as
well as other regional airports. The airlines include Air Canada, Central
Mountain Air, Horizon Air and West Jet. Charter flights may also be made
available.
The Town of Oliver is in the process of undertaking an in-depth strategic plan for
the Oliver Airport. Currently, the Town of Oliver Airport primarily serves a core
group of local and visiting owners and operators of small aircrafts. The airport
does not offer much use to the general public, with the exception of special
occasions when events and/or displays are scheduled. A Town of Oliver Airport
Strategic Planning Project was published in May, 2012. The study investigated
ways in which the airport could become a catalyst for economic development in
the South Okanagan Region. The mission of the Town of Oliver Airport is to:
TABLE 11HIGHWAY 97, 10 YEAR SUMMARY TRAFFIC VOLUME DATAFrom Junction Route 3 (Osoyoos) to Road 2 (338th Avenue)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Avg. Daily Traffic 7,395 7,471 7,216
Summer Avg. Daily Traffic 10,208 10,304 10,172
From Leighton Crescent to Green Lake Road (Okanagan Falls)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Avg. Daily Traffic 5,921 5,938 5,907 6,135 6,242 6,372 6,208 6,327 6,434 6,299
Summer Avg. Daily Traffic 7,867 7,654 7,716 8,086 8,143 8,424 8,058 8,245 8,432 8,543
Source: British Columbia, Ministry of Transportation and Infrastructure, UTVS Traffic Volumes & Growth Factors
- 56 -
"Support economic diversity and sustainable, healthy growth of all South Okanagan
communities by increasing the number of air travelers and by increasing the number of
businesses located at the Airport, in the Town of Oliver and in the surrounding
communities".
With Oliver's proximity to internationally recognized wineries, close geographic
proximity to the U.S. in terms of a point of entry for private aircrafts, easy and
affordable access for owners/operators of light aircrafts, and its availability of
land for development of compatible revenue-generating properties, the Town
considers the airport a prime candidate for future expansion and development.
In order to achieve the goals, a number of development priorities were listed,
including expanding the runway with a fully integrated taxiway system and
main apron. A goal is to develop and operate the airport with minimum reliance
on public funding.
The Final Airport Strategic Planning Report was accepted by Council on May 31,
2012.
- 57 -
5.2 DEMOGRAPHIC PROFILE
It is important to examine the demographic profiles of the local and regional
market, as a portion of hotel visitors and users are anticipated to come from the
Greater Oliver Area.
A selection of local, regional, and provincial demographic profiles have been
compiled based on Statistics Canada’s 2006 and 2011 (where available) Census
Survey. Although a portion of the 2011 Census data has been released from
Statistics Canada (population and dwelling counts; and age and sex data), much
of the demographic and income data will not be available until late 2012 (families,
households and marital status; structural type of dwelling and collectives; and
language). Additionally, as the long-form census was removed from the 2011
Census, much of the demographic data that was available in previous census
years will not be available. In its place, Census Canada has introduced the
National Housing Survey, a volunteer version of the long-form census, which
will not be available until mid-2013.
For purposes of this analysis:
• Population and age group characteristics can be found in Table 12.
• A selection of household characteristics can be found in Table 13.
• Population projections can be found in Table 14.
POPULATION & AGE GROUP CHARACTERISTICS:
Please refer to Table 12 for a breakdown of the local, regional and provincial 2011
population and age group categories as defined by Statistics Canada's 2011
census.
The local data consists of the Town of Oliver, Okanagan-Similkameen Area C,
and the Osoyoos Indian Reservation (OIB) - referred to as Greater Oliver.
The regional data consists of the Town of Osoyoos and Okanagan-Similkameen
Area A (referred to as Greater Osoyoos), as well as Penticton, and the Regional
District (RDOS) as a whole.
- 58 -
Although a wide range of data can be extracted from these tables, some of the
more salient findings relevant to an analysis of the subject area's likely market
potential include:
• The Southern Okanagan is an attractive destination for retirees. The region
is known for its mild climate, high quality of life, availability of health care
services, a diverse range of seniors’ facilities, a large and active senior
population, in addition to many cultural amenities, which make the
region an attractive area for retirees. The RDOS contains a large
proportion of the population over the age of 65 (27.6% in the region as
compared to 15.7% in the province).
• 39.3% of the Town of Osoyoos' population is over the age of 65, as
compared to 34.2% of the Town of Oliver's population, and 27.6% in
Penticton.
• The Town of Osoyoos contains a much smaller percentage of the
population 19 years of age and under as compared to the region. 11.8% of
Osoyoos' population is under 19, whereas 17.6% of the RDOS' population
is under 19. The Town of Oliver is generally in-line with the RDOS, with
17.2% of its population 19 years of age and under.
- 59 -
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- 60 -
SELECT HOUSEHOLD CHARACTERISTICS:
• The RDOS contains a significantly lower proportion of households with
children as compared to the province (18.7% in the RDOS, versus 26.3% in
the province), and correspondingly contains a significantly higher
proportion of households without children (38.9% in the RDOS, versus
29.6% in the province). In terms of one person household types, 30.2% of
the RDOS' households are one person types, versus 28.0% of the
province's households.
• The proportion of households in the Town of Oliver without children
(39.2%), as well as the proportion of one-person households (32.0%) is
slightly above levels experienced in the RDOS as a whole (38.9% and
30.2%, respectively).
• Average household size in the Town of Oliver is in-line with the RDOS at
2.2 persons per household. The Town of Osoyoos contained the lowest
average persons per household at 2.0, whereas Area C contained the
highest average persons per household at 2.5 (in-line with the provincial
average).
• The percentage of dwellings that are owned versus rented is higher in the
RDOS (75.7%) versus the province (69.9%). Penticton contains the lowest
rate of ownership (66.5%) in the study area, whereas Area C contains the
highest rate of ownership at 83.0%. The rate of home ownership in the
Town of Oliver is slightly above the RDOS as a whole (78.7% in Oliver,
versus 75.7% in the RDOS).
• Median household income in the province is overall higher than in the
South Okanagan ($52,709 in the province versus $43,035 in the RDOS).
Area A contains the highest median household income at $45,781. This is
not surprising considering that the RDOS contains a greater percentage of
seniors and one person households versus the province.
- 61 -
POPULATION/POPULATON PROJECTIONS:
The following details population projections for each of the Okanagan-
Similkameen Regional District, as well as the Southern Okanagan Local Health
Area (please refer to Figure 5 below, which displays the boundaries for the Local
Health Area, which encompasses Oliver, Okanagan Falls, Osoyoos, and
surrounding areas). BC Stats projections applies the Component/Cohort
Survival method to project the population. This method "grows" the population
from the latest base year estimate by forecasting births, deaths, and migration by
age.
As shown in Table 14, BC Stats forecasts that the RDOS will contain an
additional 11,137 people by 2031, growing from 83,167 in 2011 to 94,304 by 2031.
Annual growth rates in the Regional District are anticipated to gradually rise in
the mid-term, before beginning a gradual decline to 0.5% by 2031.
The South Okanagan Local Health Area is projected to add an additional 2,085
residents between 2011 and 2031, growing from a 2011 population of 19,612 to
21,697 by 2031. Growth rates are anticipated to be slightly lower for the Local
Health Area in comparison to the Regional District as a whole, but are expected
to follow a similar trend of rising gradually in the mid-term before declining
towards the end of the study period.
TABLE 13SELECT HOUSEHOLD CHARACTERISTICS
Oliver Area C OIB Osoyoos Area A Penticton RDOS Province
Total private households 1,940 1,550 265 2,225 770 14,595 35,245 1,643,150
Households containing a couple (married or common-law) with children 17.50% 20.0% 13.2% 12.6% 20.1% 18.3% 18.7% 26.3%
Households containing a couple (married or common-law) without children 39.20% 43.2% 35.8% 48.8% 45.5% 31.8% 38.9% 29.6%
One-person households 32.00% 23.5% 30.2% 29.7% 23.4% 35.1% 30.2% 28.0%
Other household types 11.30% 13.2% 20.8% 9.0% 11.0% 14.7% 12.3% 16.1%
Average household size 2.2 2.5 2.3 2.0 2.4 2.1 2.2 2.5
Median income in 2005 - All private households ($) $37,797 $42,733 $35,968 $43,764 $45,781 $41,383 $43,035 $52,709
Owned dwellings as % of total dwellings 78.7% 83.0% 80.4% 77.8% 81.2% 66.5% 75.7% 69.9%
Source: Statistics Canada 2006 Census
Note: Other Household Types Includes multiple-family households, lone-parent family households, and non family households (other than one person households).
- 62 -
FIGURE 5SOUTHERN OKANAGAN LOCAL HEALTH AREA CONTEXT MAP
Source: BC Stats
- 63 -
TABLE 14OKANAGAN-SIMILKAMEEN REGIONAL DISTRICT & SOUTH OKANAGAN LOCAL HEALTH AREA
HISTORICAL & PROJECTED POPULATION
YEAR
AVERAGE
ANNUAL
GROWTH RATE
POPULATION YEAR
AVERAGE
ANNUAL
GROWTH RATE
POPULATION
1986 60,936 1986 14,112
1991 2.4% 68,211 1991 2.2% 15,668
1996 3.0% 78,593 1996 2.9% 17,965
2001 -0.2% 77,750 2001 0.3% 18,192
2006 0.7% 80,351 2006 0.6% 18,695
2011 0.7% 83,167 2011 1.0% 19,612
2012 0.5% 83,616 2012 0.6% 19,720
2013 0.6% 84,095 2013 0.6% 19,831
2014 0.6% 84,637 2014 0.7% 19,962
2015 0.7% 85,258 2015 0.7% 20,110
2016 0.8% 85,905 2016 0.7% 20,260
2021 0.7% 89,110 2021 0.6% 20,916
2026 0.6% 91,930 2026 0.5% 21,389
2031 0.5% 94,304 2031 0.3% 21,697
Source: BC Stats Population Projections
OKANGAN-SIMILKAMEEN RD SOUTH OKANAGAN LHA
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1986 1991 1996 2001 2006 2011 2016 2021 2026 2031
Okanagan-Similkameen & South Okanagan Local Health Area Historical
(1986-2011) and Projected (2016-2031) Population
Okanagan-Similkameen RD Population South Okanagan LHA Population
- 64 -
5.3 LAND USE POLICIES & DEVELOPMENT TRENDS17
Oliver has been identified as a primary growth area in the South Okanagan
Regional Growth Strategy. The aim of the Growth Strategy is to encourage and
direct development to concentrate where services are located in order to protect
the integrity of rural areas, including agricultural and ecologically sensitive lands,
while maximizing servicing efficiency. Specific policies center on promoting a
compact urban form, protecting the character of rural areas, protecting the
agricultural land base and encouraging agricultural enterprise, and recognizing
the critical link between infrastructure, environment, social conditions and
human settlement for effective growth management.
In 2006, the Town of Oliver participated in the Smart Growth on the Ground
which is a program of the Design Centre for Sustainability at UBC. The Greater
Oliver Concept Plan presented the results of the initiative, which was a
collaborative process between the Town of Oliver and Electoral Area C to
identify priorities and the desired direction for the future of the region. The
Concept Plan is used to guide policy, planning and design decisions within the
Town. The vision for Oliver includes:
• Reinforce the role of the Town as the primary focus for development
• Maintain the primacy of agriculture in the rural area
• Retain the small Town and rural character of the area
For a number of years the Oliver and District Community Economic
Development Society, on behalf of the Town of Oliver and Electoral Area C, have
been working on the development of an Agricultural Resort Area (ARA) for the
region. This was based on the principles of combining conservation and
enhancement of the region's agriculture with agri-tourism attractions. Several
studies were undertaken in 2007 and 2009, with the latest report examining
issues and opportunities in regards to establishing a resort region designation.
The April 2009 report stated that the regional area of Oliver does not currently
17
City Spaces Consulting Ltd. and Geoff Pearce, prepared for Oliver and District Economic Development
Society, Oliver and Area Resort Region Designation Issues and Opportunities (April, 2009);
Regional District of Okanagan-Similkameen, South Okanagan Regional Growth Strategy (2011);
Town of Oliver, Smart Growth on the Ground: Greater Oliver Concept Plan;
Stantec, Robert Mackenzie Architect, Town of Oliver Wine Village Core Area Concept Plan (October,
2008).
- 65 -
meet the eligibility requirements. Recommendations centered on engaging in the
development of a Resort Region Strategy.
Building upon specific land use visions to augment Oliver's existing tourism
with shoulder and year-round tourism opportunities which capitalize on Oliver's
surrounding wine industry, the Town undertook a series of studies aimed at
formulating a Wine Village Core Area Concept Plan. The Official Community
Plan set the policy direction for the Wine Village Concept, with some of the
objectives being:
• To become the premier wine village of Canada
• To develop the wine village along with smart growth principles
• To create a clean and friendly environment where cultural events are
supported and heritage is celebrated
• To provide visual evidence of Oliver's wine and agricultural industries
• To encourage Oliver's citizens to become knowledgeable of local amenities,
specifically as they relate to wine, agriculture and heritage
• To connect the wine village with the surrounding rural area
The concept had envisioned residential, commercial, office, and hotel land uses
to be built on 6.29 acres of land in the heart of the Town of Oliver, along the
river's edge (please refer to Figure 6 for a context map of the Wine Village study
area). This study area incorporated a mix of publicly owned and privately owned
lands, including the Town owned R.V. Park, the CPR Station/Visitor's Centre,
the Oliver Library, and the land parcels located on the north side of Station Street
- which currently includes several low density commercial properties.
Design Guidelines were formulated in October 2008, however, due to the
onslaught of the recession, plans were derailed for the Wine Village plan.
- 66 -
FIGURE 6OLIVER WINE VILLAGE STUDY AREA (2008)
Source: Stantec, Oliver Wine Village - Design Planning Study Area (July 10, 2008).
- 67 -
5.4 INTRINSIC QUALITIES
There are many diverse activities and events held in Oliver that expand well
beyond winery related activities. Some of the desired qualities and attributes for
a four season hotel property that Oliver offers, includes:
• A quaint Town centered between the larger areas of Osoyoos and
Penticton and located adjacent to the Okanagan River canal
• A diverse landscape with stunning views – landscape include orchards
and vineyards, dry grasslands, granite cliffs, and mountain lakes
• Located in the 'Golden Mile Bench', which produces some of the most
sought after and awarded wines in the Province, including Hester Creek,
Inniskillin, and Tinhorn Creek. Oliver is stated to have some 102
vineyards totaling 2,665 acres, including 25 licensed wineries.
• Agritourism is an expanding industry, with more than 400 farms located
in the area. There are numerous cherry, apricot, plum, apple and pear
orchards where one can tour farms, pick your own fruit, and purchase
fruit at fruit stands, among other activities. Oliver Country Market is held
June to October from 8:30 to 12:30 Thursday’s and offers homegrown and
hand crafted items.
• With over 2000 hours of annual sunlight, Oliver provides the perfect
climate for outdoor recreation, from extreme to soft adventure-type
activities, including:
o Water sports (fishing, swimming, canoeing, kayaking,
windsurfing) on local Lake Tuc El Nuit and Vaseux Lake to
the north
o Golf - 2 championship courses in Oliver. The season begins in
March and often continues through November with 15 hours of
playing time in the height of the summer days.
� The Fairview Mountain Golf Club is a previous winner of
the BCPGA Golf Facility of the Year Award, is a member of
the Top 100 Golf Courses in Canada by Score Magazine, and
is consistently rated a Four Star "Must Play" Golf Facility by
- 68 -
Golf Digest. Approximately 35,000 rounds of golf are played
each year (20,000 Member rounds and 15,000 non-member
rounds).
� Nk'Mip Canyon Desert Golf Course is an 18-hole par 72
course that was expanded in 2001 to a championship model.
o Hiking and Mountain Biking – A large variety of terrain from
leisurely walks to steep trails on McIntyre Bluff. Some popular
trails include:
� The International Hike & Bike Trail - follows the course of
the Okanagan River channel from McAlpine Bridge on
Highway 97 in the north to Osoyoos Lake in the south. There
is an access point to the trail at the Oliver Visitor Centre. An
18.4 km trail for walking and cycling
� The Golden Mile Trail – Developed by Tinhorn Creek Estate
Winery. 10 km trail for hiking and mountain biking
� McKinney Road/Mt. Baldy Loop – Starts in the heart of
Oliver, and loops through the Okanagan Highlands from
Oliver to Bridesville. A 51 km distance
� Oliver Mountain – A 4 km walking trail
� McIntyre Bluff – A 7 km trail for hiking and mountain biking
� Mahoney Lake – Consists of open forest, grasslands, saline
lakes and basalt bluffs
� Ripely & Madden Lake Trails – 5 km trail for walking,
biking, and horseback riding
o Bird Watching - Oliver is a premier area for bird watching
enthusiasts. Oliver's Golden Mile Trail is part of the National
Bluebird Trail and Vaseux Lake hosts a bird sanctuary and summer
banding station. The Okanagan Valley Birding Trail booklet
identifies 20 birding sites within a 25 km radius of the Oliver town
centre. Over 300 species of birds are found in the South Okanagan.
o Wildlife Viewing – Oliver and area contains a diverse landscape,
with opportunities to view California bighorn sheep, rattlesnakes,
scorpions, mule deer, gophers, and badgers, among other wildlife
and desert insects.
- 69 -
o Horseback Riding – along Ripley and Madden Lake trails, and
through Wolf Creek Trail Rides; Southern Pines Stable; and Nk’Mp
Trail Rides
o Skiing (downhill and cross country), snowboarding, snowshoeing
at Mt. Baldy, located 35 kilometres (approximately 40 minutes) east
of Oliver. Mt. Baldy has one of the highest base elevations in the
province at 5,665 feet. The Ski Area also has a Championship 18-
hole Frisbee Golf Course. Last season the Mt. Baldy Ski
Corporation hosted 19,116 skier visits.
o Mt. Baldy Tubing & Tobogganing Hill
o Snowmobiling
o Ice fishing
o A mix of recreation facilities:
� Curling at Oliver's Curling Rink
� Skating at Oliver Arena (the arena operates as an ice rink 6
months of the year for recreational hockey for men and
women, minor hockey, and figure skating)
� Oliver pool (a 25 metre salt-water outdoor facility open May
15th until September 1st)
� Community Centre (tennis courts, bocci pits, lawn bowling,
beach volleyball court, fitness facility)
o Archery and rifle/trap/hand gun range at the Southern
Okanagan Sportsmen's Association
o Astronomy eco-touring
o River touring – In Fall of 2012, about 30,000 Sockeye and Chinook
salmon are expected to migrate and spawn in the Okanagan River
near Oliver
• Oliver hosts numerous festivals and events throughout the year. Some of
the key events are provided below. Further information on tourism
related events or events that visitors attended in 2012 can be observed in
Appendix 1.
- 70 -
o Festival of the Grape & the Great Canadian Grape Stomp – The
16th festival held September 30, 2012 involving 50 wineries, 50 trade
vendors in Boutiques Alley, 25 plus food vendors, a kid’s venue, a
Fall art show and sale, and live entertainment. The Festival of the
Grape alone attracts approximately 3,000 to 5,000 people.
o Oliver Half-Iron Man – Approximately 925 people participated in
this event in June 2012 (not including spouses, parents, family,
friends, support, cheering squads, etc.)
o Wine Capital of Canada Triathlon – 2012 was the 10th annual
triathlon
o Half Corked Marathon - Approximately 700 attendees in 2012 (not
including spouses, parents, family, friends, support, cheering
squads, etc.)
o International Sunshine Festival – Held July 13th /14th in 2012, a 2-
day event with live musical entertainment, dancing, parade,
children’s activities, food vendors, beverage garden, etc.
Approximately 1,000 attendees participated this year.
o Fall Okanagan Wine Festival - An annual 10 day festival held in
October with over 165 events happening around the Valley. The
32nd Annual Festival took place September 28th to October 7th,
2012.
o Oliver Fire Department Seminar held in April/May - Over 450
attend (not including spouses)
o Various figure skating events held in November, January,
February and March
o Curling bonspiels held in January, February and March -
Estimated 100 participants (not including spouses, family, friends,
support, chaperones, cheering squads, etc.)
o Outdoor concerts:
� Tinhorn Creek Canadian Concert Series
� Music on the Patio at Hester Creek Estate Winery
� Music in the Park – Thursday evenings in July/August at
the Oliver Visitor Centre, presented by the Oliver
Community Arts Council
- 71 -
• In addition, there are several arts/cultural events and year-round venues
in Oliver, including:
o The Oliver Art Gallery on Main Street
o Arts and Culture Week in April
o The Artisan Market
o Oliver Country Market
Overall, there remains a great opportunity to grow the hospitality industry in
Oliver, catering to both local market and tourists/visitors alike. One of the
challenges however, is the fact that Oliver does not enjoy the same “cachet” other
communities hold in terms of “destination-ness” (Osoyoos, Penticton and
Kelowna contain relatively large resort style accommodations). Furthermore,
Oliver is limited by the fact that it does not contain a water body in proximity to
its downtown core. Each of Osoyoos, Penticton and Kelowna contain downtown
centres situated by the shores of large lakes (Osoyoos Lake and Okanagan Lake).
While Oliver does contain Tuc-El-Nuit Lake, it is a small lake, but because of its
location, several blocks off of Main Street and the Town centre, it renders the
attraction somewhat less desirable than at other lakeside destinations in the
Okanagan Valley. As such, it will be important to capitalize on Oliver's unique
strengths in an endeavor to grow the hospitality industry.
- 72 -
6.0 SUPPLY ANALYSIS
The following section provides a review of existing accommodation properties in
Oliver, as well as nearby communities including Osoyoos, Okanagan Falls,
Penticton, Summerland and Naramata.
The hotel/accommodation supply inventory found within Tables 15-19
compares the relative size, amenities offered, including the size of conference,
banquet or business facilities, the approximate overnight rates and the perceived
market orientation of each of property within the identified communities. Those
properties that the consultant has deemed high-end have been highlighted in
blue.
Particular attention will be given to identifying underserved niches that remain in
the Oliver area, which will form the basis for further discussion of the opportunity
to create a unique overnight accommodation property.
It should be noted that the count does not include bed and breakfast type
accommodations or campgrounds/RV parks.
Findings reveal:
TOWN OF OLIVER
• At present, tourism infrastructure in Oliver is limited. Nearby
communities of Osoyoos and Penticton are much more developed in
terms of its accommodation facilities - as will be further described.
• Oliver contains a total of 11 overnight accommodation properties with 140
rooms and nightly rates ranging from $60 to $375.
• The majority of Oliver’s accommodation units comprise of small
inns/motels, with the largest property containing 29 rooms (Cactus Tree
Inn, which had new rooms added in 2010).
• Oliver contains two high-end ‘guest suites’ located on the grounds of the
Hester Creek winery and the Burrowing Owl winery. Combined, these
guest suites total 17 rooms, ranging in price from $175 to $375 per night.
• Oliver does not currently contain a chain/name brand hotel.
- 73 -
• Only 1 property in Oliver was advertised as having any form of meeting
facility (The Burrowing Owl Guest House contains a cellar lounge
equipped for high tech audio-visual presentations).
In terms of future proposed hotel accommodations, there are two properties that
may enter the Oliver market:
Oliver Suites Resort: Construction began several years ago, however was halted
when the recession hit. The developer is now promoting the building as the
Oliver Suites Resort and is searching for investors in the project. The resort is
proposed to contain a total of 30 suites, which are to range in size from 1,400 to
1,750 square feet and contain 1 bedroom to 2 bedroom plus den units. Proposed
amenities include a 2,000 square foot pub-style restaurant; a 2,000 square foot
conference facility; exercise room; outdoor pool; year round hot tub; communal
barbeque area; and a potential 900 square foot day spa.
Canyon Desert Inn: The Canyon Desert project is currently being developed by
Bellstar Group Inc. in partnership with the Osoyoos Indian Band. Initial phases
consist of residential villas located on the edge of the Nk'Mip Canyon Desert
Golf Course. Future phases indicate development of the 'Canyon Desert Inn', a
full-service suites hotel with conference facilities, pool, spa, restaurant and wine
bar, with potentially up to 100 suites with a mix of studio, one and two bedroom
units. This is in the initial planning stages; no development applications have
been made for the Canyon Desert Inn.
- 74 -
TABLE 15OLIVER OVER-NIGHT ACCOMMODATION SUPPLY
# Name AddressNumber of
Rooms
General Nightly
Lodging RatesMeeting Facilities Amenities/Notes
1Bel Air Cedar
Resort33858 97th St. 11 $60-$190 /
Rural, orchard setting; Cabins, suites, kitchens,
clubhouse, RV-sites; wireless internet
2 Cactus Tree Inn 34469 Hwy 97S 29 $94-$140 /
Downtown location; Opened in 1999; New rooms
added in 2010; seasonal pool; gym; wireless
internet
3Gallagher Lake
Lodge38865 97th St. 17 $110-$185 /
Sleeping units, cabins; kitchenettes; wireless
internet; spring-fed lake; beach; row boats/paddle
boats; bbqs
4 Lakeside Resort 37005-81st St. 21 $110-$260 /
21 motel units; also has 18 cabins and 65
campground/RV Sites; On Tuc-el-nuit Lake; family
resort; boat rentals; beach; kitchens
5
Maple Leaf Motel &
RV Campground
Resort
33275 - Hwy 97S 9 $80-$90 /seasonal pool; sleeping units, RV-sites, tenting
sites; some units with kitchenettes
6Maple Leaf Motel
Inn Towne5920 Main St. 12 $95-$99 /
Downtown; modern units; mountain view; wireless
internet
7 Mount View Motel 34426 97th 7 $80-$120 /Downtown; bbqs; wireless interent available; some
units with kitchenettes
8 Pine Bluff Motel 38888 97th St. 13 $72-$130 /kitchens/kitchenettes; wireless internet; seasonal
heated outdoor pool; bbqs
9Vaseux Lakefront
Resort9710 Sundial Rd. 4 $165-$225 /
Vaseux Lakefront, Between Okanagan Falls &
Oliver; 4 unit townhouse resort; private patio;
kitchen; beach
10The Villa at Hester
Creek13163 326th St 6
$225-$295
(Executive Suite
Rates $275-$375)
/
5 tuscan style guest suites & 1 executive suite
opened in 2007; valley views, situated above
vineyard; wireless internet; continental in-room
breakfast included; geothermal temperature control;
private patio
11Burrowing Owl
Guest House
100 Burrowing Owl
Place11 $175-$350
Cellar lounge
equipped for high-
tech audio visual
presentations
Private decks; above vineyard; outdoor pool & all
season hot tub; morning breakfasts; one 1,200 sq. ft.
suite with private elevator, gourmet kitchen, 2
bedrooms, 2 bathrooms.
Total Room
Inventory:
Nightly Rate
Price Range:
140 $60-$375
Notes: Accomodation inventory does not include Campgrounds/RV Parks, or Bed and Breakfast Establishments.
TOTAL TOWN OF OLIVER
Source: HelloBC.com; British Columbia Approved Accommodation Guide
- 75 -
TOWN OF OSOYOOS
• At present, Osoyoos has a total of 20 overnight accommodation properties,
comprising 65% motel/inn properties and 35% hotel/resort properties.
• In total, Osoyoos has 1,051 rooms ranging in price from $60-$799.
• Osoyoos’ 13 motel/inn properties range in size from 9 to 42 rooms and in
price from $60 to $349.
• The 7 hotel/resort properties range in size from 26 to 226 rooms and in
price from $119 to $799.
• Hotel and resort properties contain 72% of the total overnight
accommodation room supply in Osoyoos.
• There are 3 high-end resorts in Osoyoos, each offering meeting/conference
facilities ranging in price from $209 to $799/night. Each of these high-end
resorts has been built in the past 7 years - Spirit Ridge opened in July 2005,
Walnut Beach Resort opened in April 2008, and Watermark Beach Resort
opened in November 2009.
• 6 out of the 7 hotel/resort properties in Osoyoos offers meeting/conference
facilities, with the Spirit Ridge Resort containing facilities for groups of up
to 350.
• Those accommodation facilities operating under a chain brand include; Best
Western, Coast, Holiday Inn, Bellstar, and Super 8.
- 76 -
TABLE 16OSOYOOS OVER-NIGHT ACCOMMODATION SUPPLY
# Name AddressNumber of
Rooms
General Nightly
RatesMeeting Facilities Amenities/Notes
1 Adriatic Motel 5501 E Main St. 9 $105-$120 /Kitchens; Heated Indoor Pool & Jetted Tub; bbqs; 2
blocks from public beach
2 Avalon Inn 9106 Main St. 20 $99-$179 / Southwestern style motel, centrally located
3 Sun Beach Motel 7303 Main St. 22 $89-$215 /
lakefront; boat dock; Newer (2011) 1 & 2 bedroom
suites; wireless internet; bbqs; balconies; off-season
rates $59-$175
4 Boundary Motel 7416 97th St. Hwy 97 14 $79-$99 /2 room kitchenette units; bbq area; family-oriented;
200 m from town
5 Super 8 Osoyoos 9130 Main St. 42 $119-$169 /
Seasonal heated pool, hot tub; bbq area;
complimentary continental breakfast; wireless
internet
6
Desert Surfside
Waterfront
Accommodations
7310 Main St. 26 $134-$279 /Santa Fe style suites; waterfront location;
kitchens/kitchenettes; beach patio
7Green Gables
Beach Resort7304 Main St. 17 $60-$150 /
Family oriented; Studio, 1 or 2 bedroom motel units;
all with kitchens; wireless internet; bbqs; private
beach
8Inkaneep Point
Resort16235 87th St. 10 $195-$245 /
(May-Sept) semi-detached cabins on the lake; private
beach; kitchens; boat moorage; min 7 nights in
July/Aug
9 Lakeview Motel 6004 89th St. 17 $129-$229 /
Renovated in 2007/2008; apartment-style suites;
kitchens; 1, 2 & 3 bedrooms; heated outdoor salt
water pool; bbqs
10 Poplars Motel 6404 Cottonwood Dr. 34 $105-$225 /On the lake; suites with kitchens/kitchenettes; 1 & 2
bedroom suites; bbqs; access to heated pool
11Sahara Courtyard
Inn6205 Cottonwood Dr. 39 $79-$199 /
1 to 3 bedrooms; pools; 100 yards to beach; wireless
internet
12 Sandy Beach Motel 6706 Ponderosa Dr. 25 $169-$349 /
On the lake; studio & 2 bedroom suites with
kitchens; private patios; bbqs; beach, private tennis
court, volley ball court; free rowboats, canoe; kayak
13Destiny Beach
Resort20 Magnolia Pl. 15 $119-$199 /
Family-oriented; quiet west side of Lake Osoyoos; 1
bedroom units, sleeping up to 5; kitchenettes; private
beach; bbqs; heated pool; wireless internet
Total Room
Inventory:
Nightly Rate
Price Range:
290 $60-$349
14
Spirit Ridge
Vineyard Resort &
Spa
1200 Rancher Creek
Rd.226 $209-$559
Conference
facilities/Meeting
rooms for groups of
up to 350
Opened in July, 2005. Pueblo-style architecture; 1 &
2 bedroom villas & suites with kitchen, dining area
& living room; spa; restaurant; outdoor pools, hot
tub, waterslide; fitness studio; paddleboat, canoe,
kayak, mountain bike rentals; Sonora Dunes Golf
Course; NK'MIP Cellars Winery; NK'MIP Desert
Cultural Centre. Strata-owned resort, developed &
managed by Bellstar in partnership with Osoyoos
Indian Band.
15Best Western
Sunrise Inn5506 Main St. 66 $139-$259 /
Southwestern style hotel; renovated in 2009; some
rooms with kitchenettes/kitchens and jetted tubs;
complimentary continental breakfast; indoor pool &
hot tub; fitness room; 2 restaurants; wireless internet
16Coast Osoyoos
Beach Hotel
7702 Main St. Hwy
3E60 $149-$325
Meeting venue for
up to 50
Private beachfront hotel on Osoyoos Lake; wireless
internet; indoor pool with waterslide, hot tub;
exercise room
17Holiday Inn &
Suites Osoyoos7906 Main St. 118 $119-$329
Meeting room for up
to 40 people;
Completely
equipped
boardroom with
view
Lakefront; private beach; marina; restaurants;
indoor pool; fitness centre; wireless internet; kayak
use included; complimentary boat moorage; suites
with kitchens available for additional fee; some
rooms renovated in 2010
18Casa Del Mila Oro
Resort & Spa5401 Lakeshore Dr. 26 $225-$400
1,200 sq. ft. banquet
hall facility with
capacity for up to
100
On Lake Osoyoos; 2 bedroom condos & 3 bedroom
townhomes; pool, hot tub; private dock with
moorage; beach
19Walnut Beach
Resort4200 Lakeshore Dr. 112 $249-$699
Meeting facilities for
up to 150
Opened April 2008. Luxury resort on Lake Osoyoos;
opened April 2008; private lakeshore & beach;
outdoor pool, hot tubs; wine bar; spa
20Watermark Beach
Resort15 Park Pl. 153 $219-$799
Meeting facilities for
up to 150; 3,000 sq.
ft. of event space,
including 2 versatile
meeting rooms
Opened the end of 2009. Studios, 1, 2 & 3 bedroom
pent-house suites; gourmet kitchens; private
balconies; outdoor seasonal pool, hot tubs,
waterslide; wine bar; beach; spa; fitness centre
Total Room
Inventory:
Nightly Rate
Price Range:
761 $139-$799
Total Room
Inventory:
Nightly Rate
Price Range:
1,051 $60-$799
Notes: Accomodation inventory does not include bed and breakfast establishments, or Campgrounds/RV Parks
TOTAL OSOYOOS
Source: HelloBC.com; British Columbia Approved Accommodation Guide
MOTELS
HOTELS/RESORTS
TOTAL MOTELS/INNS
TOTAL HOTELS/RESORTS
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PENTICTON
• Penticton contains a large supply of economical motel and hotel properties.
• Penticton has the largest overnight accommodation inventory in the
Southern Okanagan, with 34 hotels/motels/resorts, with a total of 1,588
rooms.
• 82% are motels (28 properties) with 18% hotels/resorts (6 properties).
• Hotel/resort properties range in size from 36 to 203 rooms and in price
from $79 to $375.
• Hotels/resorts comprise 42% (673 rooms) of Penticton’s total room supply
(1,588 rooms).
• 5 of the 6 hotels/resorts contain meeting facilities, with the Penticton
Lakeside Resort, Convention Centre and Casino offering a Grand Ballroom
with space for up to 1,000 people.
• A number of chain hotel brands operate in Penticton, including Best
Western, Coast, Days Inn, Ramada Inn, Sandman Hotel, and Super 8.
- 78 -
TABLE 17PENTICTON OVER-NIGHT ACCOMMODATION SUPPLY
# Name AddressNumber of
Rooms
General Nightly
RatesMeeting Facilities Amenities/Notes
1 5000 Motel 1742 Main St. 25 $79-$179 /1-3 beds/room; 1,2 bdrm suites; wireless
internet; bbqs; seasonal heated outdoor pool
2 Apple Tree Inn 2406 Skaha Lake Rd. 23 $62-$185 /Kitchen suites; 1, 2 or 3 bdrms; 1 bed sleepers;
seasonal heated pool; bbqs; family oriented
3 Beachside Motel 3624 Parkview St. 26 $110-$195 /Family oriented; 1 & 2 bdrm; wireless internet;
bbqs; sauna; heated indoor pool
4 Bel Air Motel 2670 Skaha Rd. 42 $105-$169 /Hot tub; sauna; seasonal heated pool; bbqs;
park like setting
5 Black Forest Motel707 Westminster Ave.
W.24 $89-$185 / Seasonal heated outdoor pool
6 Black Sea Motel 988 Lakeshore Dr. 27 $100-$250 /
Across Okanagan Lake; 1 & 2 bdrm;
kitchenettes; licenced restaurant; bbqs; wireless
internet
7 Bowmont Motel 80 Riverside Dr. 47 $99-$228 /
Steps from Okanagan Lake; outdoor kitchen;
pool; courtyard; kitchens; min. 3 nights in
summer
8 Carmi Motel 1473 Main St. 23 $89-$189 / Family suites; seasonal heated outdoor pool
9Crown Resort
Motel950 Lakeshore Dr. 28 $159-$269 /
Steps from Okanagan Beach; heated saltwater
pool; 1 & 2 bdrm suites with full kitchens
10 Empire Motel 3495 Skaha Lake Rd. 33 $104-$169 /
seasonal heated outdoor saline pool; bbqs;
ping pong; gazebos; near beach; wireless
internet
11 Flamingo Motel 2387 Skaha Lake Rd. 25 $85-$225 /Seasonal heated outdoor pool; sports court;
wireless internet; bbq; family oriented
12Holiday House
Motel3355 Skaha Lake Rd. 15 $55-$155 /
Kitchen; baketball hoop; bbq; 5 min walk to
beach; wireless internet
13Lakeside Villa
Motel4201 Skaha Lake Rd. 15 $59-$159 / Kitchenettes; bbq area; underpass to the beach
14 Log Cabin Motel 3287 Skaha Lake Rd. 34 $98-$285 /Large family kitchen units; jetted tub; heated
outdoor pool; bbqs
15 Pass Motor Inn 2307 Skaha Lake Rd. 45 $80-$280 /Heated outdoor pool; art gallery; bbqs; near
beaches
16Penticton Slumber
Lodge274 Lakeshore Dr. 44 $138-$475 /
Across from Okanagan Lake, beach; water
sport activities; executive lakeview suites with
jetted tub; full kitchen suites & studios; indoor
pool; bbqs
17 Riverside Motel 110 Riverside Dr. 42 $125-$275 / Family oriented
18 Rochester Resort 970 Lakeshore Dr. W. 36 $139-$300 /Across from Lake; 1 bdrm suites; 1 & 2 bed
units; kitchenettes; bbqs; lakeview deck
19Shoreline Resort
Condominiums926 Lakeshore Dr. W. 47 $140-$410 /
Across from Lake; studio, 1, 2, 3 bdrm suites;
heated outdoor pool; bbqs
20Spanish Villa
Resort890 Lakeshore Dr. 65 $168-$425 /
Across from Lake; sandy beach; beside park;
kitchens & large studios; indoor pool; bbqs
21 Stardust Motor Inn1048 Westminster
Ave. W.55 $65-$199 /
outdoor heated saltwater pool; bbq; wireless
internet
22 Sunny Beach Motel 3648 Parkview St. 21 $45-$250 /1 & 2 bdrm; jetted tub suites; bbqs; opposite
tennis courts & park; near beach
23 Super 8 - Penticton 1706 Main St. 54 $89-$250 /
bbq; salt water pool, hot tub; kids theme rooms;
recently renovated in 2010; continental
breakfast; high speed internet
24 Swiss Sunset Inn 2604 Skaha Lake Rd. 25 $75-$200 /Sleeping & 1 bdrm kitchen units; seasonal
heated outdoor pool; bbq area
25
Tiki Shores
Condominium
Beach Resort
914 Lakeshore Dr. 40 $140-$300 /
Beach; studio, 1, 2 & 3 bdrm or penthouse
suites; kitchen; whirlpool tubs; private patios;
bbqs; heated outdoor pool; restaurant
26 Travellers Motel 3590 Skaha Lake Rd. 19 $99-$199 /Bbqs; whirlpool; wireless internet; heated
outdoor pool; family oriented
27 Valley Star Motel 3455 Skaha Lake Rd. 15 $98-$250 /Wireless internet; bbqs; courtyard with gazebo;
seasonal heated pool
28 Waterfront Inn 3688 Parkview St. 20 $130-$175 /
(May-Oct.) Overlooking Skaha Lake; family
oriented; seconds to beach; bbqs; patios; Euro-
style sauna/spa/pool; opposite park with
sports facilities
Total Room
Inventory:
Nightly Rate
Price Range:
915 $45-$475
29Best Western Plus
Inn at Penticton3180 Skaha Lake Rd. 64 $160-$310
Meeting space
accommodates up to
30
Complimentary deluxe continental breakfast
included; indoor pool, whirlpool, outdoor pool;
bbq; 3 blks to beach; Wireless internet
30Coast Penticton
Hotel
950 Westminster Ave.
W.36 $79-$299 /
Indoor & outdoor pool with waterslide; full-
service restaurant; family suites that sleep up
to 6; 1 blk from lake; next to convention centre;
newly renovated in 2010
31Days Inn &
Conference Centre152 Riverside Dr. 104 $99-$279
3 meeting/board
rooms for groups up
to 100
1 blk from Lake; indoor pool, hot tub, outdoor
pool; complimentary continental breakfast;
Grill & Steakhouse
32
Penticton Lakeside
Resort, Convention
Centre & Casino
21 Lakeshore Dr. W 203 $160-$375
Business centre; 4
salons can be joined
to form the Grand
Ballroom, holding
up to 1,000 people
Private beach; on-site watersport rentals;
balconies; indoor pool; whirlpool; fitness
centre; hair salon; casino; gift shop; dining
room; cocktail lounge; boat docking; wireless
internet
33Ramada Inn &
Suites Penticton
1050 Eckhardt Ave.
W.125 $99-$249
Boardroom (up to 24
ppl), Atrium (up to
80 ppl), and
ballroom (up to 200)
Private patios; pub; outdoor heated pool &
restaurant; hot tub; fitness centre; bbqs; high
speed internet
34Sandman Hotel
Penticton939 Burnaby Ave. W. 141 $104-$209
Business centre;
meeting & banquet
facilities
Opposite convention centre; kitchenettes;
indoor pool; Dennys 24 hr restaurant; on-site
pub; high speed internet available
Total Room
Inventory:
Nightly Rate
Price Range:
673 $79-$375
Total Room
Inventory:
Nightly Rate
Price Range:
1,588 $45-$475
Notes: Accomodation inventory does not include bed and breakfast establishments, or Campgrounds/RV Parks
TOTAL PENTICTON
MOTELS/INNS
HOTELS
Source: HelloBC.com; British Columbia Approved Accommodation Guide
TOTAL MOTELS/INNS
TOTAL HOTELS/RESORTS
- 79 -
OKANAGAN FALLS
• The consultant uncovered only 3 overnight accommodation properties,
containing a combined 35 rooms.
• Nightly rates range from $99 to $175.
• None of the guest house/motel accommodation properties surveyed
contained meeting/conference facilities.
• After discussions with City Planning staff, it was noted that there has been
demand for condos in Okanagan Falls, with motel properties starting to
disappear. Several years ago there was an application to build a hotel
property, however it fell through.
SUMMERLAND & NARAMATA
• A combined total of 7 properties with a total room inventory of 246 units
and a nightly rate price range of $55 to $479.
• One upscale property (Summerland Waterfront Resort) contains 45% of the
total room supply in Summerland and Naramata, with prices ranging from
$189 to $479.
• The Summerland Waterfront Resort is the only property in Summerland
and Naramata that offers meeting/conference facilities (for up to 150
people)
TABLE 18OKANAGAN FALLS OVER-NIGHT ACCOMMODATION SUPPLY
# Name AddressNumber of
Rooms
General Nightly
Lodging RatesMeeting Facilities Amenities/Notes
1Big Horn Ridge
Guest House
2357 Rolling Hills
Rd.2 $150-$175 /
Rustic elegance, adult adobe-style guest house
on 4 ha; bbq; common kitchen
2Holiday Beach
Resort Motel5133 7th Ave. 21 $99-$175 /
Across from Skaha Beach; 1, 2 bdrm kitchen
units; 1 apt. suite; internet; heated outdoor
pool; bbqs; horseshoes; lawn games
3 La Villa Motel 5029 7th Ave. 12 $109-$159 /
Adjacent to Skaha Lake beach; quiet park
setting; patio/balcony; bbq area; lawn games;
kayak rentals; complimentary mountain bike
use; high-speed internet; kitchenettes & suites
Total Room
Inventory:
Nightly Rate
Price Range:
35 $99-$175
Notes: Accomodation inventory does not include bed and breakfast establishments, or Campgrounds/RV Parks
TOTAL OKANAGAN FALLS
Source: HelloBC.com; British Columbia Approved Accommodation Guide
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COMBINED STUDY AREA
• The total room inventory in the study area is currently estimated to be 3,060
rooms found in 75 motel/inn/hotel/resort properties.
• Computes to an average of 40.8 rooms per accommodation facility.
• The nightly room rates are currently in the range of $45 to $799.
• Penticton and Osoyoos comprise 86% of the total room inventory (Penticton
with 52% of the entire room inventory, and Osoyoos with 34% of the
supply).
• Oliver contains 5% of the entire study area room supply, Okanagan Falls
comprises 1%, and Summerland/Naramata comprises 8%.
TABLE 19SUMMERLAND & NARAMATA OVER-NIGHT ACCOMMODATION SUPPLY
# Name AddressNumber of
Rooms
General Nightly
Lodging RatesMeeting Facilities Amenities/Notes
1Pleasant View
Motel & RV Park13608 Hwy 97 14 $55-$155 / Lake/mountain views; kitchenettes; heated pool
2 Rosedale Motel 14001 Rosedale Ave. 26 $109-$199 /Family-oriented; kitchen; seasonal heated pool;
bbqs; wireless internet
3 Summerland Motel 2107 Tait St. 58 $100-$211 /
Listed as Summerland's only 3.5 star motel;
pool; kitchen suites; 28 rooms built summer
2008
4Summerland
Waterfront Resort13011 Lakeshore Dr. 110 $189-$479
Meeting Facilities for
up to 150; 1,800 sq. ft.
Watefront Ballroom for
up to 140 in theatre
syle; 750 sq. ft.
Lakefront Ballroom
On Lake Okanagan; kitchens; balconies; studio,
1 & 2 bedroom suites & lofts; outdoor pool, hot
tubs; beach; fitness room; day spa
1 BC Motel 365 Robinson Ave. 10 $75-$95 /(April-Oct.) kitchen; bbqs; large outside seating
area
2Sandy Beach Lodge
& Resort4275 Mill Rd. 19 $155-$330 /
Restored 1940's log lodge; lakefront; breakfast
included; outdoor pool, hot tub; tennis; deluxe
log cottages, 2 bdrm, kitchen, bbq. (cottages 2
night min. $2,000-$2,700
3 Village Motel 244 Robinson Ave. 9 $95-$145 /(April-Nov.) Quiet country setting; bbq; some
kitchen suites; wireless internet available
Total Room
Inventory:
Nightly Rate
Price Range:
246 $55-$479
Notes: Accomodation inventory does not include bed and breakfast establishments, or Campgrounds/RV Parks
TOTAL SUMMERLAND & NARAMATA
SUMMERLAND
NARAMATA
Source: HelloBC.com; British Columbia Approved Accommodation Guide
- 81 -
• The consultant has identified a total of 16 accommodation properties
classified as hotel/resort. This represents 21% of the total fixed roof
accommodation supply in the study area, and 51% of the total room supply
in the study area.
• In Oliver, two accommodation properties have been classified as
hotel/resorts: The Burrowing Owl Guest House and the Villa at Hester
Creek, which combined contain only 1% of the total hotel/resort room
supply in the study area.
• The consultant has identified 6 of the 16 properties as high-end, luxury
hotels/resorts, with a total of 618 guest suites. While Oliver contains 2 of
the high-end properties (Burrowing Owl and Hester Creek
Accommodations), combined they only amount to 17 suites (28% of the
total high-end accommodation suites in the study area).
• 13 hotel/resort properties in the study area offer some form of
meeting/conference centre space, representing a 17% share of all
accommodation types, or 81% of all classified hotel/resort properties.
• 84% of the properties offering meeting facilities are found in Penticton and
Osoyoos (38% in Penticton and 46% in Osoyoos). Oliver and Summerland
each contain one accommodation property offering some form of
meeting/conference space.
• 4 hotel/resort properties contain day spas, with 3 of the properties located
in Osoyoos and 1 in Summerland.
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As determined, the Town of Oliver contains a limited supply of overnight
accommodation facilities and lacks mid to upscale hotels/resorts with meeting
space and amenities to compete with the hotels/resorts situated in the
neighbouring communities of Osoyoos, Penticton and Summerland.
FIGURE 7STUDY AREA COMPARISON - ROOM TOTALS
140
1,051
35 246
1,588
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Number of Rooms
Number of Fixed-Roof Accommodation Rooms
Oliver Osoyoos Okanagan Falls Summerland/Naramata Penticton
17
761
110
673
0
100
200
300
400
500
600
700
800
Number of Hotel/Resort Rooms
Oliver Osoyoos Summerland Penticton
- 83 -
7.0 HOTEL DEMAND ANALYSIS
The purpose of this section is to identify the market opportunity for a hotel
facility. It serves to focus the project’s target market on several key cohorts,
analyzing the characteristics of each market segment in an effort to determine
future levels of on-site room-night demand.
7.1 DEMAND SUBMARKETS
Based on the consultant’s field work, area analysis, and knowledge of the local
lodging market, it is felt that the demand for hotel accommodation at the subject
site can generally be segmented into the following distinct submarkets:
1) Leisure/Visiting Friends and Relatives –
This segment incorporates all types of leisure travelers and the visiting
friends and relatives segment (commonly referred to as the “In-Law
Demand”).
This is considered to be the largest generator of room night demand in the
Southern Okanagan. Furthermore, this segment is considered to be the
segment that generates the greatest demand during weekends, summer
months and holiday periods. The snow-bird leisure market is a significant
generator in the local off-season periods.
2) Business Segment –
Business/industry-generated demand, not including conferences, or other
similar functions. This generally encompasses business travel from local or
regional businesses. The majority of such travelers are expected to stay in
above-average quality hotels. This segment generates a large portion of its
demand during weekdays.
3) 'Other' Segment -
The 'Other' segment incorporates demand generated through sports
teams/tournaments, festivals and events, conferences, family reunions, and
other large meetings.
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7.2 STUDY AREA
For purposes of this analysis, the study area under investigation includes those
hotel/resort properties identified within the Supply Analysis (Section 6) in each
of Oliver, Osoyoos, Okanagan Falls, Penticton, Summerland and Naramata. As
discussed in Section 6, a total of 16 hotel/resort properties were identified in the
study area, representing a total of 1,561 rooms. Motel and Inn properties have
been excluded for purposes of this analysis, as they are not considered to be
primary competition to hotel properties in Oliver.
2011 occupancy rates for the study area have been estimated to be 84% in the
summer season, 52% in the shoulder season, and 30% in the winter season, which
have been guided by historical occupancy rate trends. Considering the above, a
total estimated 275,392 occupied room nights occurred in the study area
throughout the course of 2011.
Implementing historical Okanagan Valley visitor profile data from Tourism
British Columbia, as well as estimates based on the consultant's field work and
area analysis, a breakdown of the percentage of demand by Demand Submarket
has been provided. As can be observed in Table 20, the Leisure/Visiting Friends
and Relatives segment comprised an estimated 88% of the total occupied room
night demand in the study area in 2011, representing approximately 242,000 total
room nights.
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7.3 SUPPLY PROJECTION The consultant has examined the potential supply of additional hotel or resort
properties entering the study area market. After examination of the market and
discussions with planning department officials, at the time of study undertaking,
there are two properties with potential to enter the study area market, which
total 130 suites. Both of these accommodation properties are located in the Town
of Oliver, and are described in Section 6. It should be noted that these are
assumptions only. There is a possibility that these properties will never be fully
developed or could potentially be developed in later years. Additionally, other
properties may enter the market that the consultant is unaware of. For example,
the City of Penticton has recently commissioned two feasibility analyses to
examine accommodation options, but at present, there are no applications in the
permit queue.
TABLE 20STUDY AREA 2011 OCCUPIED ROOM NIGHTS
Study Area (# of Hotel/Resort Accommodation Rooms) 1,561
Season2011 Occupancy
Rate# of Days
Occupied
Room Nights
Summer Season 84% 62 81,297
Shoulder Season 52% 152 123,381
Winter Season 30% 151 70,713
Total Rooms Occupied 275,392
Market Segment2011 Occupied
Room NightsPercentage Share
Leisure/Visiting Friends & Family 242,345 88%
Work/Business Activity 19,277 7%
Other* 13,770 5%
Total 275,392 100%
*Other includes sports/tournaments, festivals and events, conferences, family reunions.
Sources:
Tourism British Columbia, Research Services, A Profi le of Visitors to British Columbia's Okanagan Valley: Focus On Cultural Tourists (2004).
Tourism British Columbia Research & Planning, Okanagan Valley Wine Consumer Research Study 2008 Results (Summer, 2009).
Urbanics Consultants Ltd. (2012)
- 86 -
Based on these assumptions, the total accommodation supply will increase from
the current 1,561 rooms to 1,691 rooms in 2017, representing an annual increase
of 2%.
7.4 FUTURE GROWTH IN DEMAND FOR HOTEL ROOMS The demand for hotel rooms in the study area was estimated at 275,392 room
nights in 2011. Historical data reveals that between 2005 and 2010, the total room
night demand grew at an average annual rate of 5.9% in the RDOS. The
consultant has estimated that demand for room nights in the study area will
grow at an average annual rate of 3.9% over the course of the study period. This
growth rate will assume anticipated improvements in the economy, tourism
growth, local population growth, and business growth of the Southern
Okanagan. Accordingly, the demand for study area hotels is expected to be
303,000 in 2014, 345,000 by 2017, and 373,000 by 2020.
As Table 22 indicates, the projected growth by market segment for the study area
is as follows:
• Leisure/Visiting Friends & Relatives - Demand is projected to grow at
annual rates of 2.5% to 3% in the short-term, before increasing to a high of
4% to 4.5% in the mid-term, before declining to 2.5% and 1.5% towards the
end of the study period in 2020. This growth will largely be dependent on
the overall economic conditions of the province as well as the success of
tourism marketing and branding programs for the Southern Okanagan
TABLE 21STUDY AREA - SUPPLY PROJECTIONSPotential Additional Properties: 2011 2012 2013 2014 2015 2016 2017
# of Rooms:
Oliver Suites Resort 30
Canyon Desert Inn 30 30 40
Total Supply: 1,561 1,561 1,561 1,591 1,621 1,651 1,691
% Change 0% 0% 2% 2% 2% 2%
Note: Does not incorporate the potential hotel under investigation.
- 87 -
Region on a four-season basis. In relation to leisure travel on a Canada
wide basis, the 2012 HAC Canadian Travel Intentions Survey found that
82% of leisure travelers said they will be travelling more or the same for
vacation this year, demonstrating a positive outlook on the overall leisure
travel industry.
• Business Segment - Demand is projected to grow at 2.5% to 3.5% in the
short-term, 5% to 6% in the mid-term, before gradually declining to levels
of 2.5% by the end of the study period. The prime reason for this growth is
the anticipated growth of business incorporations and expansions in the
Southern Okanagan (such as high technology, viticulture and wine
production, as well as aviation and health care). In addition, with the
construction and future operation of the correctional facility, it is
anticipated that this would garner demand for hotel accommodations.
This growth is further exemplified by the 2012 HAC Canadian Travel
Intentions Survey, which displays that business travel was projected to be
up 4% in 2012.
• 'Other' Segment - Demand is projected to grow at levels of 3% and 4% in
the short-term, increasing to 5% in the mid-term, before declining to 2%
by the end of the study period. Again, demand is anticipated to rise as
overall economic conditions improve and with the anticipated growth in
business activity and population growth.
TABLE 22FUTURE GROWTH IN DEMAND FOR HOTEL ROOMSMARKET GROWTH 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Estimated Demand By Market Segment (Room Nights):
Leisure 242,345 248,403 255,855 266,090 276,733 289,186 302,200 312,776 320,596 325,405
Annual Growth 2.5% 3.0% 4.0% 4.0% 4.5% 4.5% 3.5% 2.5% 1.5%
Business Activities 19,277 19,759 20,451 21,473 22,762 24,128 25,334 26,601 27,399 28,084
Annual Growth 2.5% 3.5% 5.0% 6.0% 6.0% 5.0% 5.0% 3.0% 2.5%
Other 13,770 14,183 14,750 15,340 15,954 16,751 17,589 18,468 19,022 19,403
Annual Growth 3.0% 4.0% 4.0% 4.0% 5.0% 5.0% 5.0% 3.0% 2.0%
Total Occupied Room Nights 275,392 282,345 291,056 302,903 315,449 330,065 345,122 357,845 367,017 372,891
Annual % Growth 2.5% 3.1% 4.1% 4.1% 4.6% 4.6% 3.7% 2.6% 1.6%
Total Supply
Available Room Nights 569,765 569,765 569,765 580,715 591,665 602,615 617,215 617,215 617,215 617,215
Market Occupancy Rate 48% 50% 51% 52% 53% 55% 56% 58% 59% 60%
Source: Urbanics Consultants Ltd.
- 88 -
7.5 MARKET SHARE & OPPORTUNITY ANALYSIS As the previous section determined the total potential for additional hotel rooms
in the study area over the next decade, it is necessary to determine what share of
this demand the subject hotel can be expected to capture. There are a number of
factors that must be considered when determining market share projections for a
hotel facility, namely:
• Economic influences that may impact hotel development.
• Supply factors, such as competing development areas, market supply gaps,
etc.
• The extent to which Oliver has leveraged its unique location relative to the
expanding wine industry and leveraged its title as the "Wine Capital of
Canada".
• Opportunities to create a greater degree of "destinationness" for Oliver.
• The intrinsic locational attributes of Oliver and opportunities to leverage
its potential.
• The extent to which Oliver has fully leveraged its tourism/hospitality
pursuits, cultural pursuits, and entertainment pursuits to create vibrant
people place environments.
• The class of hotel operator.
• The breadth of hotel amenities and facilities offered.
In view of the uncertainty in the above, a sensitivity analysis has been employed
in order to account for a range of likely market shares that a hotel project might
be able to capture. The consultant has assumed that 2015 would be the earliest
the proposed hotel would enter the market. The market shares proposed by the
consultant are predicated on the range of assumptions of varying market
dynamics, and are designed to be objective and practical in not only defining
opportunities, but in measuring the strength of the Oliver market. Relatively
conservative market shares have been employed, such that the low attraction
scenario does not exceed a 4% share of total annual demand for room nights in
the study area; the medium attraction scenario does not exceed a 6% share of
- 89 -
demand; and the high attraction scenario does not exceed an 8% share of total
annual demand for room nights in the study area.
Considering the forecasted room night demand for each of the low, medium and
high attraction scenarios, the consultant has tested the occupancy rates for
various sizes of hotels - 60, 80, 90, 100, and 120 suite units.
Section 9 will further examine potential development scenarios based on the
outputs of the market analyses.
As noted, the low, medium and high attraction scenarios are influenced by a
plethora of factors, including external and internal factors, which are discussed
in the following sub-section.
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TABLE 23HOTEL OPPORTUNITY ANALYSIS
2015 2016 2017 2018 2019 2020
Total Study Area Estimated Occupied Room Nights 315,449 330,065 345,122 357,845 367,017 372,891
LOW ATTRACTION SCENARIO:
Projected Site Market Share By Demand Segment:
Leisure/Visiting Friends & Relatives 3% 3% 3% 4% 4% 4%
Business 5% 5% 5% 6% 6% 6%
Other 3% 3% 3% 4% 4% 4%
Projected Room Night Demand By Segment:
Leisure/Visiting Friends & Relatives 8,302 8,676 9,066 12,511 12,824 13,016
Business 1,138 1,206 1,267 1,596 1,644 1,685
Other 479 503 528 739 761 776
TOTAL: 9,919 10,385 10,860 14,846 15,229 15,477
% OF TOTAL STUDY AREA DEMAND: 3% 3% 3% 4% 4% 4%
MEDIUM ATTRACTION SCENARIO:
Projected Site Market Share By Demand Segment:
Leisure/Visiting Friends & Relatives 5% 5% 5% 6% 6% 6%
Business 7% 7% 7% 8% 8% 8%
Other 5% 5% 6% 6% 6% 6%
Projected Room Night Demand By Segment:
Leisure/Visiting Friends & Relatives 13,837 14,459 15,110 18,767 19,236 19,524
Business 1,593 1,689 1,773 2,128 2,192 2,247
Other 798 838 1,055 1,108 1,141 1,164
TOTAL: 16,228 16,986 17,939 22,003 22,569 22,935
% OF TOTAL STUDY AREA DEMAND: 5% 5% 5% 6% 6% 6%
HIGH ATTRACTION SCENARIO:
Projected Site Market Share By Demand Segment:
Leisure/Visiting Friends & Relatives 7% 7% 7% 8% 8% 8%
Business 9% 9% 9% 10% 10% 10%
Other 7% 7% 8% 8% 8% 8%
Projected Room Night Demand By Segment:
Leisure/Visiting Friends & Relatives 19,371 20,243 21,154 25,022 25,648 26,032
Business 2,049 2,171 2,280 2,660 2,740 2,808
Other 1,117 1,173 1,407 1,477 1,522 1,552
TOTAL: 22,537 23,587 24,841 29,160 29,909 30,393
% OF TOTAL STUDY AREA DEMAND: 7% 7% 7% 8% 8% 8%
TOTAL AVERAGE ROOM NIGHT DEMAND (per evening on an annual basis)
Low Attraction Scenario 27 28 30 41 42 42
Medium Attraction Scenario 44 47 49 60 62 63
High Attraction Scenario 62 65 68 80 82 83
ANNUAL OCCUPANCY RATES FOR HOTELS OF VARIOUS SIZES (# OF ROOMS)
LOW ATTRACTION SCENARIO:
60 45% 47% 50% 68% 70% 71%
80 34% 36% 37% 51% 52% 53%
90 30% 32% 33% 45% 46% 47%
100 27% 28% 30% 41% 42% 42%
120 23% 24% 25% 34% 35% 35%
MEDIUM ATTRACTION SCENARIO:
60 74% 78% 82% 100% 103% 105%
80 56% 58% 61% 75% 77% 79%
90 49% 52% 55% 67% 69% 70%
100 44% 47% 49% 60% 62% 63%
120 37% 39% 41% 50% 52% 52%
HIGH ATTRACTION SCENARIO:
60 103% 108% 113% 133% 137% 139%
80 77% 81% 85% 100% 102% 104%
90 69% 72% 76% 89% 91% 93%
100 62% 65% 68% 80% 82% 83%
120 51% 54% 57% 67% 68% 69%
Source: Urbanics Consultants Ltd.
- 91 -
7.6 INFLUENCES OF FUTURE DEMAND EXTERNAL INFLUENCES OF FUTURE DEMAND Some external influences will contribute to or detract from demand for
accommodation facilities. These include, but are not limited to the following:
• Expected economic drivers, particularly:
o An expanded and diversified economic base
o Increased tourism as the local profile expands and assumes greater
recognition
o The future 360-cell correction centre
o Potential future expansion and development of the Oliver Airport
• Geopolitical influences, particularly:
o Passport requirements and border control issues
o Potential influence of future terrorist activity on cross-border travel
• Economic influences, especially:
o Exchange rate fluctuations
o Sustained low inflation and interest rates
Although these elements are all outside of the control of the proposed hotel, they
bear mentioning because various contingencies can, to some extent, be made in
anticipation of these external forces.
INTERNAL INFLUENCES OF FUTURE DEMAND
The following items will further influence the nature and degree of hospitality
market capture:
• Hotel operator
o Class of operator
o Strength of operator’s reservation system
o Efforts taken by the operator to develop awareness of the property
- 92 -
• Hotel amenities and facilities, including:
o Quality of the layout of rooms and room finishings, including
furniture, linens, fixtures, appliances, etc.
o Conference/banquet facilities
o Business facilities
o In-house dining / drinking options
o Exercise and/or other wellness/fitness facilities
• Changes to the surrounding development program, with respect to:
o The size, strength, and branding of non-hotel facilities
o The appeal and attraction of street level shopping and
eating/drinking
o Reducing the distance and enhancing physical linkages between the
surrounding amenities
These internal factors, all of which can be influenced or controlled by a
hospitality facility’s management, will to a fairly significant extent determine
whether a hotel will be successful or not. The hotel’s location and market
orientation are not alone sufficient to ensure the hotel’s success.
- 93 -
7.7 HOTEL MARKET ANALYSIS The following section will serve to recommend an appropriate size and market
orientation of a hotel property in Oliver. This will reflect the quantitative and
qualitative characteristics of probable levels of competition as summarized in the
previous sections of hotel supply and demand.
Based on results of the supply analysis and review of economic and market
demand factors, the consultant recommends that there is opportunity for
development of an 'upper-mid' scale hotel property in the range of 80 to 100
rooms in Oliver. The upper-mid tier is described as a hotel property classified at
the high-end of the mid-price category, and low-end of the upscale category (to
be further described in the next sub-section).
The consultant recommends pursuing an upper-mid range class of hotel, in part
due to the recent saturation of upscale accommodation facilities in the study area.
In the past five to six years, several luxury accommodation facilities were built
including the Villa at Hester Creek and Burrowing Owl Guest House in Oliver,
Walnut Beach Resort and Watermark Beach Resort in Osoyoos, and Summerland
Waterfront Resort in Summerland.
An upper-mid range hotel property, if planned and designed well, that
incorporates amenities, such as a small to mid-size conference centre with
banquet facilities, meeting rooms, swimming pool, hot tub, fitness facility,
restaurant, a small retail component, and possibly a small spa, will serve to
attract a broad market base, including families, local and out of town patrons, as
well as business patrons on a year-round basis.
Assuming a hotel of 80 to 100 rooms with sufficient amenities to remain
competitive in the wider market, market shares as per the Medium to High
Attraction Scenarios could potentially be realized.
- 94 -
7.8 POTENTIAL HOTEL OPERATORS This section will evaluate potential operators, provide rankings of hotel brands
and chains according to room numbers and surveys conducted by business users,
and conclude with a recommendation of operators who are seen to be the best fit
for a hotel in Oliver.
RANKING OF GLOBAL HOTEL BRANDS BY ROOM COUNT
Table 24 provides a ranking of the top twenty hotel brands in the world,
according to number of rooms, as of January 1, 2012. Note that most of the top
hotel brands are for the mid-range hotel market. Also note that the ranking by
room number is vastly different than a ranking by hotel properties, reflecting the
fact that the average number of rooms per hotel property varies dramatically. For
example, Hyatt has an average of 423 rooms per hotel, and Marriott Hotels,
Hilton Hotels, and Sheraton each have an average of over 345 rooms per
property, whereas Best Western, Comfort Inn & Suites, and Super 8 have 76, 77,
and 63 rooms on average per property, respectively.
The ranking also provides an indication of the rate of growth (or decline) of the
number of rooms per brand. It is important to take his data with a grain of salt
because in some cases the growth or shrinkage of room numbers is not as a result
of organic growth or acquisitions, but rather as a result of re-branding between
brands under a single roof. For example, the growth of IHG's Holiday Inn
Express by some 5,400 rooms was offset by the decline in conventional Holiday
Inn rooms by nearly 4,800. Best Western continues to dominate the classification,
and have been regrouping properties from different categories of Best Western,
Best Western Premier, and Best Western Plus.
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RANKING OF TOP HOTEL BRANDS BY CATEGORY The previous ranking, although insightful in identifying the relative size and
growth of these global hotel brands and chains, does not readily lend itself to
assisting in the selection of a suitable hotel for Oliver. As such, the consultant has
examined an additional ranking system that isolates various North American
hotel brands according to specific market orientation (Luxury, Upper-Upscale,
Upscale, Mid-Price, Select Service, and Extended Stay). Undertaken by Business
Traveler News on an annual basis, hotels are evaluated according to distinct
criteria including quality of sales staff, quality of business centre, meeting
facilities, quality of food, and overall price/value relationship. Ratings are
presented on a numerical scale from one to five, with an average total provided.
Although these rankings have been performed with a corporate orientation, the
results should generally be applicable for any kind of travel type.
Based on the consultant's analysis and probable market orientation of a hotel
property in Oliver, the consultant has selected to display the results for the
Upscale and Mid-Price Categories as per the 2012 survey results. This 'Upper-
Mid' category represents hotels/resorts that offer accommodation at a lower
price point – services, amenities, guest rooms, etc. may not be as lavish as those
found within the Upper Upscale and Deluxe categories. The Upper-Mid category
can also be described as a reasonably priced mid-tier luxury product. The
following provides a list of the identified ‘Upper-Mid’ hotel/resort chains:
TABLE 24RANKING OF GLOBAL HOTEL BRANDS BY ROOM COUNT (2012)
Rank 2012 Rank 2011 Hotel Brand Hotel Group Properties (2012) Rooms (2012) Change (Rooms)% Change
(Rooms)
Average # of
Rooms Per
Property
1 1 Best Western Best Western 4,078 311,598 4,443 1.40% 76
2 2 Holiday Inn IHG 1,233 225,328 -4,789 -2.10% 183
3 3 Mariott Hotels Marriott International 555 205,595 1,576 0.80% 370
4 5 Hilton Hotels Hilton Worldwide 561 200,170 7,304 3.80% 357
5 4 Comfort Inn & Suites Choice Hotels 2,590 199,875 -2,257 -1.10% 77
6 6 Holiday Inn Express IHG 2,114 196,666 5,438 2.80% 93
7 7 Hampton Inn Hilton Worldwide 1,847 181,087 2,734 1.50% 98
8 19 Home Inns Home Inns 1,426 176,562 82,664 88.00% 124
9 8 Days Inn of America Wyndham Hotel Group 1,864 150,436 456 0.30% 81
10 9 Sheraton Hotels & Resorts Starwood Hotels 415 144,648 3,148 2.20% 349
11 10 Super 8 Motels Wyndham Hotel Group 2,249 142,254 5,987 4.40% 63
12 11 Courtyard Marriott International 913 134,719 3,650 2.80% 148
13 12 Quality Inn & Suites Choice Hotels 1,410 128,753 661 0.50% 91
14 13 Ramada Worldwide Wyndham Hotel Group 845 114,306 -4,736 -4.00% 135
15 14 Ibis Accor 933 113,077 5,342 5.00% 121
16 16 Crowne Plaza IHG 387 105,104 -1,051 -1.00% 272
17 17 Hyatt Hotels Hyatt Hotels 239 101,098 1,904 1.90% 423
18 15 Motel 6 Accor 1,028 99,438 -8,208 -7.60% 97
19 20 Mercure (inc. Mgallery, Orbis) Accor 774 95,192 5,114 5.70% 123
20 18 Radisson Hotels Carlson Rezidor Hotel 421 94,640 83 0.10% 225
TOTAL 25,882 3,120,546 109,463 3.60% 121
Source: MKG Consulting, 2012
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The results are summarized in Table 25.
In addition to those US hotel chains provided in the Business Travel News
Survey, the consultant has further classified additional hotel brands that fit the
recommended 'upper-mid' category. These include:
• Prestige Hotel & Resorts • Coast Hotels & Resorts • Delta Hotels & Resorts • Sandman Signature Hotels & Resorts • Ramada
• Kimpton Hotels • Bellstar Hotels & Resorts
TABLE 25RANKING OF TOP U.S. HOTEL CHAINS
UPSCALE
Hotel Chain Average Rating Total
Embassy Suites 4.33
Doubletree 4.32
Crowne Plaza 4.31
Wyndham 4.00
Radisson 3.93
MID-PRICE
Hotel Chain Average Rating Total
Hampton Inn 4.17
Holiday Inn Express 4.08
Holiday Inn 4.00
La Quinta 3.81
Fairfield Inn 3.80
Best Western 3.63
Comfort Inn 3.43
Comfort Inn & Suites 3.40
Source: Business Travel News (BTN) Online
US Hotel Chain Survey (2012)
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RECOMMENDATIONS FOR OPERATIONAL "BEST FIT"18
In light of the project's suggested market orientation of an upper-mid category
(likely towards the high-end of the mid-price category, and low-end of the
upscale category), the following brands are perceived to represent optimal
operators for the subject hotel, and therefore merit further exploration in terms of
recruitment as managers for a future hotel in Oliver:
• Prestige Hotel & Resorts
• Coast Hotels & Resorts • Delta Hotels & Resorts • Sandman Signature Hotels & Resorts • Best Western (possibly a Best Western Plus)
• Ramada • Holiday Inn • Fairfield Inn & Suites
A brand name hotel franchise is recommended for a number of reasons. For
example, studies report that 85% of business travelers and 76% of leisure
travelers preferred branded hotels over independent properties. Analyses
display that brands add value over and above contributors to a property's value,
such as net operating income and revenue per available room. The effects of
branding are most noticeable in midmarket and upscale hotels. In addition,
branded hotels are said to fare better than independently-operated properties in
economic downturns, as exemplified by a 2011 study undertaken by The
Pennsylvania State University School of Hospitality Management.
18
Cornell Hotel and Restaurant Administration Quarterly, The Role of Brand Affiliation in Hotel Market
Value, Volume 47, Issue 3 (2006);
Lodging Hospitality, Study Shows Hotel Branding Works (January 6, 2011).
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8.0 SITE ASSESSMENT The consultant believes that it would be advantageous for the Town if a hotel
were to be developed within the Town centre, as the hotel will be in the centre of
Oliver's downtown, close to restaurants, services, recreation centres, tourism
centre, etc. Furthermore, a new hotel property may serve to spur additional
development in Oliver's downtown centre, such as additional restaurants,
entertainment venues, and tourism type industries, and contribute to an overall
revitalization of downtown Oliver.
The site deemed by the consultant to represent the greatest potential in terms of
hospitality development, is the current site of the Town-owned Centennial RV
Park, generally bounded by Fairview Road to the south, the Okanagan River to
the east, the Oliver Visitor's Centre to the north, and Station Street to the west
(please refer to Figure 8 and Figure 9). This site is approximately 3.55 acres, and
comprises a portion of the area previously set out for development of the Wine
Village Core Area (please refer to Section 5.3 for a description).
As per the Town of Oliver Zoning Bylaw 1330, which was adopted on September
10, 2012, a portion of the site is zoned as Town Centre (C3), with the remaining
portions zoned as Major Park (P2). The C3 Zone permits a range of uses,
including a hotel; restaurant; retail establishment; licensed retail liquor store;
apartment dwelling; art gallery; office; among other uses. The maximum floor
area ratio is 3.0.
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FIGURE 8SITE CONTEXT MAP
SITE LOCATION
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Access to the site is considered easy and direct. While it does not have direct
frontage onto Main Street/Highway 97, it is easily accessible located just one
block east of Main Street on Station Street, and is connected to Main Street
through a complete grid of streets. The site is centrally located in the Town and
has river frontage. It is approximately 1.1 kilometres from the Oliver Airport and
less than 1 kilometre from the South Okanagan General Hospital.
Current and surrounding land uses to the site include:
• The site currently is used as an RV Park, located east of Station Street and
west of the Hike and Bike Trail and river.
• The site borders the Oliver Hiking and Biking Trail on its eastern
boundary, running adjacent to the Okanagan River channel
FIGURE 9RECOMMENDED HOTEL SITE
SITE BOUNDARY
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• The Oliver Visitor Centre is located in the northern portion of the site, east
of Station Street and west of the Hike and Bike Trail and river. The
visitor’s centre is located in the historic CPR Station, built in 1923.
• North of the Visitor Centre is Lions Park, which contains a playground,
skateboard facility, basketball hoop and a covered pavilion. The pavilion
is used for entertainment as well as the annual summer farmer’s market.
• The Oliver Library branch is located just southwest of the site, bordering
Fairview Road and Station Street.
• On the west side of Station Street, the Town owns two lots (lots 6 and 7 of
Block 3), which are currently empty and comprise some 920 square metres.
• Additional uses on the west side of Station Street include an OK Tire gas
bar and auto service centre, the Royal Canadian Legion, and a few low-
rise buildings and undeveloped land parcels.
To evaluate the factors which will influence the success of the hotel project, it is
worthwhile to review the strengths, weaknesses, opportunities and threats
(S.W.O.T.) as they pertain to the recommended site.
Strengths:
• The site is located in a central location in the heart of Oliver
• The site borders the Okanagan River and is located on the hike and bike
trail
• It is a large site and comprises Town owned property
• The Oliver Airport is approximately 1.1 kilometres from the site
• The site is adjacent to the Oliver Visitor Centre, which will be an ideal
complement to a hotel facility
• There are two parks located at either end of the City owned land parcels
(Lions Park to the north and Kinsman Park to the south) and the Oliver
Recreation Centre is a short walk away (approximately 400 metres from
site)
• The site is in close proximity to existing recreation facilities, and arts and
cultural facilities, providing easily accessible entertainment
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• The site is in close proximity to major employers in the area, including less
than 1 kilometre from the South Okanagan General Hospital and is
approximately 7 kilometres from the future correctional facility.
Opportunities:
• The site is in close proximity to the Oliver Airport. The potential
upgrading of the airport provides opportunities for tourism expansion in
Oliver and will prove beneficial to a proposed hotel in Oliver's downtown
core.
• The site is large enough to develop not only a hotel but complementary
uses including potentially some attractive retail shops, service-commercial
type uses, residential components, as well as a possible provision for
future hotel expansion.
• In addition, there remains potential to acquire properties in the site’s
immediate surroundings (particularly on the west side of Station Street)
and create frontage onto Main St. with potential to create a
tourism/entertainment focused area in the centre of Town.
Weaknesses:
• There are several features of the site that are deemed to represent varying
challenges for the proposed development. What is more important is for
the development program to be designed to mitigate these unfavourable
factors as best possible.
• Potential weakness include that the site does not have the capacity or
natural features to compete with several of the accommodation units that
have been built in the study area recently (i.e. the property will have no
lakefront access and corresponding amenities including a beach and
marina. There will be no on-site golf course, equestrian facilities, etc.). This
could potentially pose a weakness considering that a recent trend in the
development of accommodation facilities is to create destination resort
style properties - i.e. recent resorts built in Osoyoos.
• The site does not have direct exposure onto Main Street (Highway 97), the
primary thoroughfare in the Okanagan.
• The Centennial RV Park currently occupies the site. For a hotel property to
be developed, the RV Park would have to be relocated.
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• The streetscape on the west side of Station Street could use improvements,
with views of the back ends of several buildings.
In its entirety, the consultant deems that the subject site possesses many natural
attributes and qualities that would support its development. The creation of an
exciting, well designed development program will play a critical role in the
success of the project, and thus, should be carefully undertaken bearing in mind
the challenges and opportunities presented by the subject site.
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9.0 RECOMMENDED HOTEL DEVELOPMENT PROGRAM This section outlines the recommended development program for a hotel
complex and will further identify the investment opportunity for such a facility.
The first sub-section proposes a "development program" in terms of site planning
considerations.
Note that specific room attributes, including room sizes, pricing, design, and
furnishings, will all be heavily contingent upon the specific operator chosen for
the subject hotel. Nonetheless, the following provides an indication of the
approximate appropriate characteristics for the subject site, based on comparable
properties and perceived gaps in the local accommodation market.
ROOM SIZES Based on such a pricing structure and the room breakdown for other comparable
hotels, the following room mix and approximate room sizes have been
determined to be appropriate for the subject site:
• Guest Rooms – 340 sq. ft. Standard hotel room with a fridge, microwave, and coffee maker, but no kitchenette. Variety of rooms with one king or two queen beds.
• Studios – 390 sq. ft.
Similar to, but larger than, the standard hotel room, with more space for chairs, desk, and other furniture.
• Small Suites– 460 sq. ft.
Suite with kitchenette. • 1 Bedroom Suites - 570 square feet
One-bedroom suite with full kitchen, and more spacious than the small suite.
• 2 Bedroom Suites – 720 sq. ft. Two-bedroom suite with full kitchen.
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Assuming such a selection of rooms, and in light of the present and foreseeable
future demand and supply conditions, the consultant believes there to be
sufficient market support for a hotel room breakdown as follows:
CONFERENCE/MEETING SPACE
• A conference centre of approximately 5,000 square feet would serve to
cater to a variety of functions such as corporate events, mini-trade shows,
weddings, family reunions, etc.
• Approximately 3,000 square feet could consist of a ballroom - divisible
into two or three rooms of equal size), as well as a total of 2,000 square feet
of additional meeting space including a boardroom and possibly a small
business centre. The business centre would contain one or two computer
terminals with printing capabilities.
• The ballroom space could accommodate between 150 and 200 guests for a
banquet, or approximately 250 guests in a theatre-style arrangement.
FITNESS/SPA/POOL FACILITIES
The addition of several amenities will cater to all age groups and bolster demand
for a variety of market segments, while setting the hotel apart from other
accommodation facilities in Oliver. Amenities could possibly include:
• A fitness centre of some 1,200 to 1,300 square feet. This amenity is often
desirable to corporate travelers and those travelling for sports related
events/tournaments.
Room Type % of Total Sq. Ft. Per
Room# of Units Total Sq. Ft.
Guest Rooms 44% 335 40 13,400
Studios 40% 390 36 14,040
Small Suites 10% 460 9 4,140
1 Bedroom Suites 3% 570 3 1,710
2 Bedroom Suites 2% 720 2 1440
90 34,730
Net Sq. Ft. per Hotel Unit 386
Total:
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• Possibly a small spa of some 1,400 to 1,500 square feet, including a few
treatment rooms, which could potentially be operated by hotel
management, or leased to a third party operator.
• Possibly an indoor or outdoor pool and hot tub. The hot tub is especially
attractive during the fall and winter months.
RESTAURANT/LOUNGE
• It has been assumed that there will be a restaurant and lounge which will
be operated by hotel management of some 2,000 to 3,000 square feet. It is
recommended to be branded so as to appeal to a wide variety of patrons,
catering to both families and corporate clientele.
• Creativity, innovative delivery, and a focus on healthy menu items that
reflect unique target customer needs guide the Food and beverage
industry in BC's lodging operations. An increasing trend in mid-market
operators is an expanded breakfast menu, and creating new services such
as 24-hour snack stations and branded coffee bars.
RETAIL SPACE
• Possibly two small retail outlets that might consist of a convenience type
store, boutique clothing store, bike rental outlet, gift shop, etc.
PARKING
• Implementing the Town of Oliver's Zoning Bylaw and the Minimum
Required Parking Spaces for each class of building, approximately 73
parking spaces would be warranted for the 62,700 square foot hotel
complex.
With the inclusion of conference/meeting space, a fitness facility, spa, pool, and
a several one and two bedroom suites, the hotel complex will serve to fill an
accommodation void in the Town of Oliver. It is recommended that the hotel be
managed by a respected name brand operator. Studies report that 85% of
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business travelers and 76% of leisure travelers preferred branded hotels over
independent properties. Analyses display that brands add value over and above
contributors to a property's value, such as net operating income and revenue per
available room. The effects of branding are most noticeable in midmarket and
upscale hotels.
As Table 26 indicates, the proposed 90 room hotel would require approximately
62,700 square feet of gross floor area.
TABLE 26HOTEL COMPLEX DEVELOPMENT PROGRAM
ASSUMED HOTEL COMPONENTS
90 rooms
4 storeys
Area (Sq. Ft.) Comments
GUEST ROOMS 34,730 90 rooms at 386 net sq. ft. per room
CONFERENCE/MEETING SPACE
Ballroom 3,000
Meeting/Board Rooms/Business Centre 2,000
Sub-Total: 5,000
SUPPORTING FACILITIES
Fitness Centre 1,260 90 rooms at 15 net sq. ft. per room
Spa 1,440 90 rooms at 16 net sq. ft. per room
Restaurant/Lounge 2,400 80 seats at 30 sq. ft. per seat
Kitchen (Restaurant/Banquet) 1,480 20% of Restaurant & Ballroom Area
Retail Space 1,200 Two retail stores (600 sq. ft. each)
Service Areas (Back of House, Storage) 5,400 90 rooms at 60 net sq. ft. per room
Administration Facilities 1,980 90 rooms at 22 net sq. ft. per room
Sub-Total: 15,160
LOBBY 1,400
CIRCULATION SPACE 6,400 Avg. 1,600 sq. ft. per floor
HOTEL COMPLEX GROSS FLOOR AREA 62,690
Guest Rooms (Gross per hotel unit) 697
Guest Rooms (Net per hotel unit) 386
HOTEL COMPLEX PARKING (Number of Stalls)
Hotel 30 1 per 3 Hotel Rooms
Dining/Lounge Facilities 20 1 per 4 Seats
Retail 4 1 per 322.9 sq. ft. Retail Gross Floor Area
Conference/Meeting Space 15 1 per 322.9 sq. ft. Conference Gross Floor Area
Loading Spaces 4 1 per 16,146 sq. ft. Gross Hotel Complex Floor Area
Sub-Total: 73 Total Hotel Complex Parking Stalls
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10.0 FEASIBILITY ANALYSIS
The preceding research and market analysis revealed adequate demand for a 90
room hotel as per the medium attraction scenario. The following incorporates
these projections into an overall five-year Pro Forma Statement of Revenues and
Expenses for the hotel construction and operation, followed by a projected cash
flow analysis. Overall, this analysis serves as a preliminary feasibility assessment;
it is not necessarily intended to represent the means of determining the project’s
ultimate value, notably its potential land market value.
10.1 PROJECT COSTS All costs provided are estimated 2012 dollar values. In the absence of an
appraisal, the land cost for the 3.55 acre site has been assumed to be $519,859.
This is based on the 2012 assessed value of the land ($3.36 per square foot). It is
noted that the client would be well served to engage a qualified appraiser as a
next step in the process.
Combined hard and soft costs of development have been estimated at
approximately $19.3 million. Hard costs are the direct costs of construction and
include all labour and material required for development, utilities (such as water
systems, drains, fire, etc.), services (mechanical and electrical), landscaping work,
and includes furniture, fixtures, and equipment. The consultant has assumed a
cost of $20,000 per parking stall. The ground level of the complex could possibly
be raised by some 3 feet to accommodate parking in a semi below-grade fashion
so as to respect the water table constraints, minimize excavation costs, and
reduce overall parking costs. This would be subject to further architectural and
engineering studies.
Soft costs include such elements as legal fees, special design consultants,
management costs, marketing and advertising, land surveys, realty taxes, etc. In
addition, the consultant has also included a contingency allowance at 5% for each
of hard and soft costs, which covers all estimated unforeseen conditions.
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Based on the cost estimations, the total project cost per gross floor area of hotel
space works out to $315.93, or $220,061 per hotel room. Please refer to Table 27
for a breakdown of the estimated project costs.
10.2 PROJECTED REVENUES AND EXPENSES The following presents the projected operating statement for the proposed 90
room hotel. Revenue and expense projections have been estimated by the
consultant, taking into consideration the results of the market demand analysis
and examination of the competitive market utilizing the medium attraction
scenario results. All projections make provisions for an inflationary increase of 2%
unless otherwise indicated.
TABLE 27LAND & DEVELOPMENT COSTS
ASSUMED TOTAL LAND COST (1) $519,859
DEVELOPMENT COSTS
Hard Costs (2)
Hotel Complex $195.23 /sq. ft. $12,238,949
Furniture, Fixtures, & Equipment (3) $15,000 /room $1,350,000
Parking $20,000 /stall (73 spaces) $1,460,000
Sub-Total: $15,048,949
Contingency 5% of Hard Costs $752,447
Total Hard Costs: $15,801,396
Soft Costs
Soft Costs 21% of Hard Costs $3,160,279
Financing Costs 5% of Hard Costs $158,014
Sub-Total: $3,318,293
Contingency Allowance 5% Soft Costs $165,915
Total Soft Costs: $3,484,208
TOTAL DEVELOPMENT COSTS $19,285,604
PROJECT STATISTICS (Inclusive of Land Cost & Development Costs)
Project Cost Per GFA ($/Sq. Ft.) $315.93
Project Cost Per Hotel Room $220,061
Notes:
1) The land cost for the 3.55 acre site has been assumed to be $519,859. This has been strictly based on the 2012 assessed value of the land ($3.36 per square foot).
2) Hard cost estimated from construction cost databases, including RS Means QuickCost Estimator, Butterfield Construction Consultants, & HVS
Design 2012 Hotel Cost Estimating Guide.
3) Furniture, Fixtures, & Equipment Costs guided by HVS U.S. Hotel Franchise Development Cost Guide
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Rooms Department
Based on an examination of competitive hotel facilities in the study area, the
consultant has provided an estimate of the average daily room rate that each
type of hotel unit could likely capture. The weighted average calculates to
$134.88 (2012 value). Projections assume that the rate will increase by 2.0% per
annum. Assuming that the first full year of hotel operation begins in 2015, the
average daily room rate is projected to be $143.14.
Please refer to Table 28 for the projected room revenue, derived from the
expected occupancy levels and room rates.
Operating costs include wages and salaries, laundry and dry cleaning, guest
supplies, cleaning supplies and reservation expenses. Based on comparable
hotels, the expense has been estimated at 26% of total room revenue.
Food & Beverage
For purposes of the Oliver Hotel, the consultant has projected food and beverage
revenues to include a lounge/restaurant, room service, and banquets/meetings,
which includes meeting room rental, audio/visual rental and food and beverage
revenue. Based on a review of historical operating performance for comparable
hotels, food and beverage revenues are projected at $77.00 per occupied room in
2015, increasing 2.0% per annum, reaching $85.01 per occupied room in 2020.
Food and beverage departmental expenses include cost of goods sold, labour and
additional operating costs. Expenses have been forecasted at 75% of gross food
and beverage revenue in 2015.
TABLE 28PROJECTED AVERAGE DAILY ROOM RATE & ROOM REVENUE
2015 2016 2017 2018 2019 2020
Occupancy Rate 49% 52% 55% 67% 69% 70%
Occupied Room Nights 16,228 16,986 17,939 22,003 22,569 22,935
Average Daily Room Rate $143.14 $146.00 $148.92 $151.90 $154.93 $158.03
Room Revenue $2,322,759 $2,479,901 $2,671,400 $3,342,145 $3,496,720 $3,624,520
Revenue Per Available Room (RevPar) $70.71 $75.49 $81.32 $101.74 $106.45 $110.34
Notes:
Assumes a 90 room hotel as per the Medium Attraction Scenario, opening in 2015.
Average Daily Room Rate estimated to grow at 2.0% per annum.
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Telecommunications
Telecommunications revenues are anticipated to be in line with full service hotels
with estimated revenue of $0.75 per occupied room in 2015, and increasing in
accordance with inflation and the number of occupied room nights in the
following years. Expenses include equipment rental and cost of sales, with
expenses projected at 80% of revenues.
Rentals & Other Income
This incorporates fax and copies revenue, laundry revenue, pet revenue, no show
and cancellation revenue, commission income from vending machine, and other
miscellaneous revenue. Net revenues are projected at $1.00 per occupied room in
2015, increasing on an annualized basis with inflation and the number of
occupied room nights.
Spa
Revenues from the spa have been estimated at approximately $9.50 per occupied
room in 2015 and have been assumed to increase at a rate of 3% (slightly higher
than the assumed inflation rate of 2%). Spa expenses have been estimated at 76.5%
of total spa revenues in 2015, gradually declining to 75% of spa revenues.
Undistributed Expenses
Undistributed expenses includes administration and other general expenses
(salary and benefits of administrative and office staff, office supplies, accounting
and legal expenses, and other office related expenses), marketing and guest
entertainment (salary and benefits of sales and marketing staff, guest
entertainment, advertising, plus other expenses associated with sales and
promotion), property operation and maintenance (wages and benefits for
additional maintenance personnel, repairs, gardening and landscaping, expenses
to upkeep public areas, all guest units, pool area, etc.), and energy (cost of power,
heat, light, water and sewage). Such undistributed expenses have been projected
at 18% of total annual revenue.
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Fixed Expenses
After examining historical and financial data, the consultant has projected fixed
charges to comprise 9% of total revenues. Fixed charges include property and
business taxes, insurance, management fees, and a reserve for asset replacement.
Leased Income
It has been assumed that two retail outlets of some 600 square feet each will be
leased out to third party operators. A triple net lease of $28.00 has been applied
to the retail outlets.
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TABLE 29HOTEL COMPLEX REVENUES & COSTS
2013 2014 2015 2016 2017 2018 2019 2020
Total Rooms 90 90 90 90 90 90
Available Room Nights 32,850 32,850 32,850 32,850 32,850 32,850
Occupancy Rate 49% 52% 55% 67% 69% 70%
Occupied Room Nights 16,228 16,986 17,939 22,003 22,569 22,935
Average Daily Room Rate $143.14 $146.00 $148.92 $151.90 $154.93 $158.03
REVENUE
Room Revenue $2,322,759 $2,479,901 $2,671,400 $3,342,145 $3,496,720 $3,624,520
Food & Beverage (per occupied room) $77.00 $78.54 $80.11 $81.71 $83.35 $85.01
$1,249,530 $1,334,065 $1,437,082 $1,797,910 $1,881,064 $1,949,814
Telecommunications (per occupied room) $0.75 $0.77 $0.78 $0.80 $0.81 $0.83
$12,171 $12,994 $13,998 $17,512 $18,322 $18,992
Rentals & Other Income (Net) (per occupied room) $1.00 $1.02 $1.04 $1.06 $1.08 $1.10
$16,228 $17,326 $18,663 $23,349 $24,429 $25,322
Spa (per occupied room) $9.50 $9.79 $10.08 $10.38 $10.69 $11.01
$154,163 $166,206 $180,796 $228,408 $241,315 $252,587
TOTAL REVENUES $3,754,851 $4,010,491 $4,321,939 $5,409,325 $5,661,850 $5,871,235
DEPARTMENTAL EXPENSES
Rooms (% of Revenue) 26% 26% 26% 26% 26% 26%
$603,917 $644,774 $694,564 $868,958 $909,147 $942,375
Food & Beverage (% of revenue) 75% 75% 75% 75% 75% 75%
$937,148 $1,000,549 $1,077,812 $1,348,433 $1,410,798 $1,462,360
Telecommunications (% of revenue) 80% 80% 80% 80% 80% 80%
$9,737 $10,395 $11,198 $14,010 $14,658 $15,193
Spa (% of revenue) 76.50% 76.30% 76.00% 75.50% 75.00% 75.00%
$117,935 $126,815 $137,405 $172,448 $180,986 $189,440
TOTAL DEPARTMENTAL EXPENSES $1,550,802 $1,782,533 $1,920,979 $2,403,848 $2,515,589 $2,609,369
TOTAL DEPARTMENTAL INCOME $2,204,048 $2,227,958 $2,400,961 $3,005,477 $3,146,261 $3,261,865
UNDISTRIBUTED OPERATING EXPENSES (% of revenue) 18% 18% 18% 18% 18% 18%
$675,873 $721,888 $777,949 $973,679 $1,019,133 $1,056,822
GROSS OPERATING PROFIT $1,528,175 $1,506,069 $1,623,012 $2,031,798 $2,127,128 $2,205,043
FIXED CHARGES (% of revenue) 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
$337,937 $360,944 $388,975 $486,839 $509,566 $528,411
NET OPERATING INCOME $1,190,238 $1,145,125 $1,234,037 $1,544,959 $1,617,562 $1,676,632
Lease Income (Two retail units @ 600 s.f. each) $33,600 $34,272 $34,957 $35,657 $36,370 $37,097
ADJUSTED NET OPERATING INCOME $1,223,838 $1,179,397 $1,268,994 $1,580,616 $1,653,931 $1,713,729
% of Gross Revenue 32.6% 29.4% 29.4% 29.2% 29.2% 29.2%
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10.3 PROJECTED CASH FLOW ANALYSIS
Based on the inputs provided, a cash flow forecast has been prepared estimating
the probable revenue and cost streams between 2013 and 2025 (hotel operation
estimated to begin in 2015). The results are then discounted to a present-value.
The consultant has made the following assumptions regarding the cash flow
analysis.
Project Financing
The consultant has assumed that bank financing would be obtained to cover the
project's capital shortfalls. The loan interest is assumed to be 3.5% above the
Bank of Canada's prime rate, which at the time of this valuation is 3%.
Construction loan interest has been assumed to be 2% above the permanent loan
interest rate. As such, the permanent loan is estimated at 6.5%, with construction
loan estimated at 8.5%.
The loan to value ratio has been estimated at 65%, with an amortization term of
25 years. It has been calculated that an annual payment of $1,145,101 is required
to pay off the loan with a 25 year amortization period.
Project Performance
The consultant has inputted the terminal cap rate at 10% and the discount rate at
12%. This has been based on PKF's Hotel Investment and Lending Outlook for
2012 in Canada. According to PKF, 2010 and 2011 terminal cap rates averaged a
10% value, with discount rates averaging 12%. 2012 rates have been estimated in
the 9-10% and 11-12% range respectively for Canadian hotel properties.
The consultant has estimated the property value or sales price within the tenth
year of operation. Implementing the terminal cap rate of 10%, the estimated hotel
complex sales price is $19,348,648.
The net present value (NPV) is an evaluation based on a project's cash flows and
initial investment. NPV can be described as an indicator of the value of an
investment, as opposed to IRR which is an indicator of the yield of investment.
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For a real estate development, NPV is the sum of all the discounted cash inflows
as well as cash outflows. Accounting for the assumptions enumerated, the hotel
complex's NPV is expected to be $-1,589,080 with a return rate of 9%.
Considering that this base case scenario yields a negative NPV, the hotel complex
is demonstrating that it may be difficult to perform adequately on its own and to
secure financing for such a project.
When undertaking a discounted cash flow analysis strictly on projected
operating results (total operating revenue and expenses, as well as undistributed
expenses and fixed charges), yields a Net Present Value of $8,092,551,
corresponding to $89,917, per hotel room.
- 116 -
TA
BL
E 3
0P
RO
JEC
TE
D C
AS
H F
LO
W A
NA
LY
SIS
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
202
420
25
2026
Total Rooms
90
90
90
90
90
90
90
90
90
9090
90
Available Room Nights
32,850
32,850
32,850
32,850
32,850
32,850
32,850
32,850
32,850
32,850
32,850
32,850
Occupancy Rate
49%
52%
55%
67%
69%
70%
70%
70%
70%
70%
70%
70%
Occupied Room Nights
16,228
16,986
17,939
22,003
22,569
22,935
22,995
22,995
22,995
22,995
22,995
22,995
Average Daily Room Rate
$143.14
$146.00
$148.92
$151.90
$154.93
$158.03
$161.19
$164.42
$167.71
$171.06
$174.48
$177.97
Terminal Cap Rate
10.00%
Discount Rate
12.00%
Assumed Sale Year
2025
Deb
t C
alc
ula
tion
Construction Loan interest
8.5%
Interest Rate
6.5%
Term (Years)
25
Loan To Value Ratio
65%
AD
JUS
TE
D N
ET
OP
ER
AT
ING
IN
CO
ME
$1,2
23,8
38
$1,
179,3
97
$1,
268,9
94
$1,5
80,6
16
$1,6
53,9
31
$1,7
13,7
29
$1,7
52,4
67
$1,7
87,5
16
$1,8
23,
266
$1,8
59,7
32
$1,8
96,9
26
$1,9
34,8
65
Land Cost
-$519,859
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Cost of Construction
$0
-$19,285,604
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Loan Calculations
Negative Cash Flow
-$519,859
-$19,285,604
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Acquisition & Development Loan
$337,908
$12,535,643
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Acquisition & Development Interest Cost
-$1,094,252
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Acquisition & Development Loan Repayment
-$12,873,551
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Permanent Loan
$13,967,803
$0
$0
$0
$0
$0
$0
$0
$0
$0$0
$0
Permanent Loan Payment
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
-$1,145,101
$0
Loan Balance
-$237,194
-$252,612
-$269,031
-$286,518
-$305,142
-$324,976
-$346,100
-$368,596
-$392,555
-$418,071
-$445,246
$0
Loan Balance at Sale
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0-$9,227,510
$0
Sale at end of Study Period
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0$19,348,648
$0
Before Tax Cash Flow (BTCF)
-$181,951
-$6,749,961
$78,737
$34,296
$123,893
$435,515
$508,830
$568,628
$607,366
$642,415
$678,165
$714,631
$10,872,964
$0
NP
V-$
1,5
89,0
80
IRR
9%
VA
LU
E P
ER
HO
TE
L R
OO
M-$
17,6
56
- 117 -
10.4 SENSITIVITY ANALYSIS
To further explore various scenarios of performance, the consultant has run
sensitivity analyses on the model for various factors, including its robustness to
market shocks, and changes in occupancy rates and construction costs.
Terminal Capitalization Rate & Discount Rates:
Two scenarios have been run. One being where the market is optimistic with an
increase in hotel investment interest nationally, with a terminal cap rate of 9%
and a discount rate of 11%; and one whereby the economic conditions are not as
favourable, with a terminal cap rate of 11% and a discount rate at 13%.
Implementing each of the base case inputs (including project financing and sale
of the project in 2025), while inputting the above terminal capitalization rates and
discount rates, the following results are revealed:
Low Terminal Cap Rate and Discount Rate Scenario NPV = -$585,301 IRR = 10% High Terminal Cap Rate and Discount Rate Scenario NPV = -$2,340,417 IRR = 7% Occupancy Rates: Implementing each of the base case inputs (including project financing and sale
of the project in 2025), while inputting the occupancy rates for each of the low
and high scenarios of performance from the Hotel Opportunity Analysis, the
following results are revealed:
Low Occupancy Rate Scenario NPV = -$5,937,455 High Occupancy Scenario NPV = $2,768,949 IRR = 17%
- 118 -
Construction Costs: Implementing each of the base case inputs (including project financing and sale
of the project in 2025), while inputting construction costs of the hotel for each of
the low and high cost estimates, reveals:
Low Construction Cost ($175.71/Sq. Ft.) NPV = -$430,610 IRR = 11% High Construction Costs ($244.04/Sq. Ft.) NPV = -$4,485,254 IRR = 3% Considering the above results, it may be difficult for such a project to attract
investors, as the hotel may not reach a level of performance that investors would
typically expect. The following section will explore possible strategies to
undertake to develop a hotel.
- 119 -
11.0 RECOMMENDATIONS
As hotels are generally considered a riskier investment, given their significant
operating component, they are, increasingly seen as not being favourable
investments on a standalone basis (as demonstrated in the preceding feasibility
analysis). There are a range of additional methods that can potentially be applied
as a means of off-setting costs, such as:
• Municipally provided incentives including:
o Development Cost Charge exemptions, or reduced fees
o Discounted land value with "recovery" through participation
features in the developer's net cash flow
o Property tax free zones, or tax 'holiday' zones (particularly for the
hotel facility for a period of time)
o Zoning provisions (mixed-use, higher order land uses,
comprehensive development, etc.)
o Providing the development with increased marketable density
o Reduced parking requirements and/or the inclusion of adjacent
land for surface parking
o Municipal owned and managed parking structure
o Participation in the financing/ownership of the hotel's proposed
conference centre
• Additional land uses to help subsidize costs of hotel
• Any other similar cost reducing interventions
To discuss the latter points, more and more hotel properties are being developed
with additional land uses to subsidize the hotel capital costs. There remains an
opportunity to spread and/or reduce risk by having investment revenue flow
through multiple revenue streams and from diversified market sectors, such as
hotel, office, retail, residential, etc. Hotel projects often require some form of
stratified real estate product to make the overall project viable. In turn, the
project becomes more marketable with a synergy of compatible uses, and often
leads to accelerated absorption rates. Furthermore, the economies created from
shared facilities and services add additional benefit. This may include parking,
mechanical, management, concierge, and valet.
- 120 -
Building upon the above, the consultant sees an opportunity for Oliver to expand
and embrace its designation as the Wine Capital of Canada, while creating a
precinct that caters not only to tourists, but to the local indigenous population as
well. The consultant has recommended the downtown 3.55 acre site, adjacent to
the Okanagan River as the ideal site for a hotel complex. There are opportunities
to create an exciting development program, incorporating the 90 room hotel,
along with compatible and synergistic uses including potential for attractive
retail shops, including some form of "wine village", service-commercial
establishments, residential components and provision for future hotel expansion.
If the right synergy is achieved, it serves to increase customer patronage, rent
levels, sales volumes, and both the investment and the market value of the
project.
Additionally, given that hotels are found to be relatively difficult to finance, it
may be necessary for this project to be launched at a discounted (or perhaps zero)
dollar land cost with the presumption that the land lord would recover fair
market value on the basis of a negotiated participation feature from the project’s
future net proceeds. This is subject to the overall viability of the project and how
the municipality decides to proceed with the project.
Implementing a floor space ratio of 2.0, the 3.55 acre site could contain a gross
buildable area of approximately 309,000 square feet. After accommodating the
hotel component, potential capacity for some 246,500 square feet of buildable
area remains. Please refer to Table 31 for a recommended program for additional
uses. Potential remains to create an attractive and festive destination for the
region. The goal is to create a lively year-round people place and contribute to an
overall revitalization of downtown Oliver.
- 121 -
TABLE 313.55 ACRE SITE DEVELOPMENT PROGRAM
TOTAL SITE AREA
3.55 acres
154,594 sq. ft.
ASSUMED DENSITY
2.0 FSR
TOTAL GROSS BUILDABLE AREA
309,189 sq. ft.
ASSUMED HOTEL COMPONENTS
90 rooms
4 storeys
Area (Sq. Ft.) Comments
GUEST ROOMS 34,730 90 rooms at 384 net sq. ft. per room
CONFERENCE/MEETING SPACE
Ballroom 3,000
Meeting/Board Rooms/Business Centre 2,000
Sub-Total: 5,000
SUPPORTING FACILITIES
Fitness Centre 1,260 90 rooms at 15 net sq. ft. per room
Spa 1,440 90 rooms at 16 net sq. ft. per room
Restaurant/Lounge 2,400 80 seats at 30 sq. ft. per seat
Kitchen (Restaurant/Banquet) 1,480 20% of Restaurant & Ballroom Area
Retail Space 1,200 Two retail stores (600 sq. ft. each)
Service Areas (Back of House, Storage) 5,400 90 rooms at 60 net sq. ft. per room
Administration Facilities 1,980 90 rooms at 22 net sq. ft. per room
Sub-Total: 15,160
LOBBY 1,400
CIRCULATION SPACE 6,400 Avg. 1,600 sq. ft. per floor
HOTEL COMPLEX GROSS FLOOR AREA 62,690
Guest Rooms (Gross per hotel unit) 697
Guest Rooms (Net per hotel unit) 386
HOTEL COMPLEX PARKING (Number of Stalls)
Hotel 30 1 per 3 Hotel Rooms
Dining/Lounge Facilities 20 1 per 4 Seats
Retail 4 1 per 322.9 sq. ft. Retail Gross Floor Area
Conference/Meeting Space 15 1 per 322.9 sq. ft. Conference Gross Floor Area
Loading Spaces 4 1 per 16,146 sq. ft. Gross Hotel Complex Floor Area
Sub-Total: 73 Total Hotel Complex Parking Stalls
ADDITIONAL ON-SITE USES
Retail 10,000
Wine Related Space (ex. Wine Interpretive Centre) 10,000
Professional Arts/Office 10,000
Second Phase of Hotel 40,000 58 Hotel Rooms at 695 sq. ft. gross per unit
Other Uses 10,000
Residential 166,499 119 dwelling units assuming avg. of 1,400 sq. ft./unit
PARKING (Number of Stalls)
Retail, Wine Related Space, Professional Arts Office 93 1 per 322.9 sq. ft. Gross Floor Area
Second Phase of Hotel 18 1 per 3 hotel rooms
Other Uses 31 Assume 1 per 322.9 sq. ft. Gross Floor Area
Residential 178 Avg. of 1.5 parking stalls per dwelling unit
Loading Spaces 5 1 per 16,146 sq. ft. Gross Commercial/Hotel/Other Uses Area
Sub-Total: 326
GROSS BUILDING AREA 309,189
GROSS NUMBER OF PARKING STALLS 399 Parking Stalls (Inclusive of 9 Loading Spaces)
- 122 -
The following are examples of project components that would contribute to the
creation of a lasting and strong downtown Oliver, while providing a means of
off-setting costs and attracting a strong investor and operator for the hotel.
• It is recommended that a single development company be selected to
construct the mixed-use project, which could possibly include:
• A Wine Interpretive Centre - A collection of local wineries with an
opportunity to merchandise their wares, and educate the public on the
wine making process and history of the Okanagan Valley wine industry.
• A festive market street of retail shops and gourmet eateries, which could possibly include:
o Chocolate Shop
o Florist
o Bakery
o Pastry Shop
o Cheese Shop
o Coffee Shop
o Ice Cream Store
o Kitchen Boutique
o Deli/Bistro
o Arts/Crafts Specialty Stores
o Gift Stores
o A selection of specialty retail stores and eateries
• A selection of Professional Arts Offices, such as:
o Medical Professionals
o Financial Offices (Financial Institutions, Accountant)
o Legal Offices
o Design Offices (Architecture, Planning, Urban Design, Graphics Design, etc.)
o Other
• A total of 399 parking spaces have been estimated (73 for the hotel
complex, with a further 326 for the additional land use components). It is
recommended to investigate the potential of implementing a slightly
reduced parking requirement for this development considering that it is
downtown and a mixed-use project. The consultant has implemented an
average of 1.5 parking stalls per residential unit, which could possibly be
- 123 -
investigated for reduction to some 1.25 parking stalls per residential unit.
Furthermore, as previously described, the majority of parking could
possibly be accommodated in a semi below-grade fashion, with the
ground level of the complex raised some 3 feet to respect the water table
constraints, minimize excavation costs, and reduce overall parking costs.
Subject to further study, the parking for the entire complex could consume
no more than one level of semi below-grade parking, with a portion of
spaces also to be accommodated at-grade.
• Although not part of the 3.55 acre site per-se, it is recommended to create
an attractive outdoor plaza/gathering place just south of the tourism
office that could contain street furniture, water features, greenery, as well
as space for outdoor retail kiosks and outdoor performances (ie. buskers,
musicians, etc.). This serves to create a seamless connection between the
tourism centre and the proposed mixed-use complex.
• As a possible future expansion program, it is recommended that the
properties within Block 3 and Block 4 west of Station Street and east of the
laneway be first examined for potential development. A portion of these
properties could also be investigated for uses as at-grade parking for the
mixed-use project.
The combination of the tourism centre directly to the north, with the wine
interpretive/retail components, and specialized retail/commercial components,
serves to provide an attractive and enticing platform for a hotel operator to
establish themselves in Oliver. It creates a range of mutually complimentary
services and activities, while encouraging pedestrian activity in Oliver’s
downtown core.
It is stressed that the floor space earmarked for additional on-site uses is highly
speculative. Further assessment would be warranted to evaluate the overall
market demand potential for additional land uses, along with a complete
financial feasibility analysis for all project components.
To conclude, our preliminary feasibility analysis for the hotel complex
demonstrates that the development of a free-standing hotel is not likely to meet
private sector investors expectations of a decent return. Indeed, very rarely have
hotel developments occurred in Western Canada within the last 15 to 25 years on
an entirely free-standing basis. Financially, a hotel has proven to be, of all urban
- 124 -
land uses, the most challenging, particularly given the increased capital costs and
insufficient net operating income to amortize such costs.
These observations are consistent with the reasons why the study has focused on
the issue of planning a hotel as part of a larger mixed-use development (a
circumstance repeated in virtually all recently developed hotels in B.C.), where
the development of compatible land uses have served to absorb a portion of the
hotel's development costs.
Furthermore, and as described above, additional methods of public sector
financial assistance may be considered. The degree to such "interventions" can
only be ascertained following the preparation of a complete proposed
development program together with its intended financial analyses. Considering
the above, advancing the potential recommended 3.55 acre site, with the
inclusion of additional land uses, involves a considerable amount of additional
work before one can proceed in preparing a well conceived Request For Proposal
(RFP) for such an investment/development by the private sector.
- 125 -
12.0 ECONOMIC IMPACT ANALYSIS An examination of some of the economic impacts associated with the 90 room
hotel complex has been undertaken, with a focus on employment impacts and
development cost charges. As can be observed in the following section, the hotel
on its own has a significant effect on the local economy.
EMPLOYMENT IMPACTS Employment impacts are quantified in terms of direct, indirect, and induced
employment tied to the hotel complex construction, and hotel-related
operations/management. Employment has been grouped under the two general
headings of construction employment and on-going operating employment.
Operating employment incorporates year-round and seasonal employment
possibilities in hotel operation and management, retail operation and
management, restaurant operation and management. Each category is defined
and examined individually below:
Direct Employment is employment that is directly attributable to the
development and operations of the hotel. It is the initial, immediate economic
activities (i.e. jobs) generated by the development.
Indirect Employment is employment generated in the community because of
other spending associated with the direct employment.
Induced Employment is employment created because of expenditures by direct
and indirect employees.
Total Employment is the sum of direct, indirect and induced effects. The
multiplier (indirect and induced) employment corresponds to the maximum
potential employment stimulus resulting from activity related to the proposed 90
room hotel in terms of its construction and operations.
In order to measure the indirect and induced effects from the proposed hotel
development, economic multipliers have been utilized. Multipliers specific to
Oliver and its wider region have been implemented from BC Stat’s ‘British
Columbia Local Area Economic Dependencies’ report, which provides ratios that
- 126 -
can be used to estimate the impacts on employment and income resulting from
changes in these sources.
Please refer to Table 32 for a breakdown of the projected employment effects for
each of direct employment, indirect employment and induced employment at
the proposed hotel complex.
As can be observed, approximately 102 direct full-time equivalent construction
related jobs may be warranted over the course of the hotel complex building
period.
With respect to the use of multipliers, the indirect and induced construction
employment multiplier ratio for Oliver corresponds to 37 indirect and induced
employment positions related to the construction of the hotel complex.
In terms of hotel operations, the consultant has forecasted that at full build-out
and operation, the complex could generate approximately 78 full-time equivalent
positions, plus an additional 8 positions from indirect and induced demand.
- 127 -
TABLE 32HOTEL COMPLEX PROJECTED EMPLOYMENT
DEVELOPMENT COSTS (Excluding Furniture & Equipment) $17,935,604
Total Construction Employment
Direct Employment (5.7 per $million) 102
Indirect & Induced Employment (1.36 Employment Ratio) 37
Total Construction Employment 139
Hotel (Inclusive of Amenity Space, Spa, Conference Facility) 0.74 employees/room
Number of Hotel Rooms 90 67
Retail 1 per 442 sq. ft.
Total Square Feet 1,200 3
Restaurant 1 per 450 sq. ft.
Total Square Feet 3,880 9
Indirect & Induced Operations Employment 1.10 Employment Ratio 8
Total Operations Employment 86
*These projections represent preliminary and approximate projections of the job creation implications of the subject
project, which are subject to change pending further refinement of the master planning and development scheduling.
All financial figures are shown in nominal dollars.
Sources:
Nelson, A. Planners Estimating Guide Projecting Land Use & Facility Needs
Reed Construction Data, Construction Industry Forecasts
Recht Hausrath & Associates, 1981
BC Stats, British Columbia Local Area Economic Dependencies, 2006
EMPLOYMENT DURING CONSTRUCTION (FULL-TIME EQUIVALENTS)
OPERATING EMPLOYMENT (YEARLY FULL-TIME EQUIVALENTS)
- 128 -
DEVELOPMENT COST CHARGES Development cost charges (DCC’s) are fees that municipalities and regional
districts collect to offset a portion of the costs associated to the provision of
services that are incurred as a direct result of the development. Specific to the
Town of Oliver, the consultant has estimated the development cost charges
applicable to the proposed hotel complex which would be remitted at building
permit. Using the Town of Oliver development cost charge rates with no assist
factor, it has been estimated that the hotel complex will generate approximately
$304,500 in development cost charges.
TABLE 33HOTEL COMPLEX - DEVELOPMENT COST CHARGES
Type of Charge # of Units/# of Sq. M. Charge per Unit/Sq. M. Total Cost
Multi-Family 1 Residential Charges 14 $4,909.34 $68,730.76
Care Home Charges 76 $2,618.06 $198,972.56
Commercial 1,224.5 $30.07 $36,819.56
$304,522.88
*Calculated with No Assist factor
Source: Town of Oliver, Bylaw No. 1172; Urbanics Consultants Ltd.
TOTAL HOTEL COMPLEX:
- 129 -
APPENDIX I - 2012 OLIVER EVENTS
Source: OTA - Oliver Tourism Association & Visitor Centre (2012)
2012 Oliver tourism related events, or events that visitors have attended. Month Duration Event Venue Attendees
1 April/May 3-4 days Oliver Fire Department Seminar Oliver Area 450 *
2 May 1 Day PIG OUT Covert Farms 300
3 May 1 Day Half Corked Marathon Oliver Area 700*
4 May 1 Week Meadow Lark Festival
SO Area / Various
Locations 2500*
5
July, August,
Sept
Usually guaranteed good weather, inquiries
regarding weddings, reunions, family get
together’s, etc.,
Oliver Area / Various
Locations / Golf Courses,
Wineries, Parks, etc., Unavailable
6 June 1 Day Oliver Half Iron Man Oliver Area 925*
7 July 1 Day Oliver Sunshine Festival & Parade Oliver Community Centre 1000*
8 July 1 Day Valley First GrandfondoAxel Mercx OK
SO Area / Various
Locations 2500 *
9 1 Day Desert Half Iron Man 220*
10 August 1 Day IronMan SO Area 2500*
11 August 1 Day Oliver Airport Flyin Breakfast Oliver Airport 300 *
12 August 3 weeks - 3
camp outs OK Big League Experience
Oliver Community Centre 200*
13 Sept OK Big League Experience Oliver Community Centre 100*
14 Sept 1 Day Hester Creek Garlic Festival Hester Creek Estate Winery 1200-1400
15 Sept-Oct 10 Days Fall OK Wine Festival SO Various Locations Unavailable
16 Sept 1 Day Freakin Farmer Covert Farms 500*
17 October - 1 Day Festival Of The Grape Oliver Community Centre 3000-5000
18 Oct-May 4 Tourneys
Per Season Basketball Tournaments-High School
Oliver Senior Secondary
School 480*
19 Fall Hockey Tournaments Oliver Arena Unavailable
20 October 2 Days Covert Farms Corn Maze Covert Farms 800 *
21 November 1 Day Covert Farms Pumkin Jump & Monnlit Run Covert Frams 100 *
22 November 1 Day Paw Prints Studio & Gallery Ann.Open House &
Exhibition Area C - Paw Prints Gallery
400
23 Figure Skating Events Oliver Arena Unavailable
24 Jan, Feb,
March Curling Bonspiels
Eastlink Oliver Curling
Centre 100*
25 Feb 1 Day Seniors Music Jamboree Oliver Seniors Centre 200
26 May to
October
1 and 2 Days -
8 to 10
Tournaments
Per Season
NKMiP Golf Course Golf Course
800* - 1000*
27 May to
October
1 and 2 Days -
8 to 10
Tournaments
Per Season
Fairview Mountain Golf Golf Course 800* - 1000*
*Not including Spouses, Parents, Family, Friends, Chaperones, Support, Cheering Squads, etc.