Pool market will test the strength of the ‘staycation’ philosophy in 2016

by jason_cramp | April 5, 2016 12:30 pm

By Jason Cramp

15-12-01[1]
This is our 38th annual report on the state of the Canadian swimming pool industry, including statistical information and market analysis. Information is based on Statistics Canada’s building permit records for swimming pools with an overview of new pool permits for census metropolitan areas (CMAs). The figures are conservative and do not reflect many of the rural areas that do not require building permits for swimming pool construction.

Despite being knocked down, the pool industry always finds a way to get back up again. During years such as 2014, when pool permit registrations dropped after a series of growth between 2011-13, the diversity of services offered by many pool companies (e.g. maintenance, renovations, repair, etc.), along with their ability to reduce operating costs by adopting new systematic approaches to business management, project design, and construction are what keeps them profitable. It is also what keeps them optimistic for the coming season, as with changing climates—weather and economics—choosing the right forecasting technique can be tricky.

For instance, who would have thought you would be able to draw a line through the Ontario-Manitoba border, separating east from west, with each experiencing extremely different weather anomalies[2]? Last year, the region extending from the Great Lakes to Newfoundland and Labrador endured a record-cold winter despite it being one of the warmest globally in 135 years. On the flipside, drought, wildfires, and blistering summer temperatures each took their toll on different regions across the Prairies to the Pacific Coast.

“The balmier 2015 summer throughout much of the country generally helped the industry rebound economically after two relatively soft years,” said the Pool & Hot Tub Council of Canada’s (PHTCC’s) executive director, Robert Wood. “However, there were a couple of regional exceptions that did not see improvements in their fortunes. The weakened economy in Alberta slowed sales in this province significantly. As well, the Quebec market continued to struggle with falling demand. In a strange twist of fate, the aftermath of an especially harsh winter in the Maritimes generated additional business in the form of rebuilds/repairs.”

A wait-and-see attitude

Even though the weather provided pool builders no favours with respect to getting a shotgun start on the season—especially in the country’s largest markets—the industry, and its clients for that matter, seemed to have learned a lesson from the 2014 season. Those who remained optimistic for 2015 were, in fact, rewarded early on as opposed to the preceding year. In comparing the numbers, 402 additional pool permit registrations were recorded during the first six months of 2015, representing a 9.4 per cent increase year-over-year. In fact, when breaking up last season into three categories: start of year/early spring (January to April), mid-spring/late summer (May to August), and fall/winter (September to December), pool permit registrations were up in each. This also revealed some trends specific to the 2015 construction season. Although the year started strong, winter seems to arrive later, but lasts longer. As a result, almost 80 per cent of all pool permit registrations last year occurred during the last eight months of the year. For example, between May and August, pool permits were up by one per cent, while a warmer-than-expected September and extended fall continued to keep pool builders busy, as 14.6 per cent more permits were registered between September and December.

Overall, Statistics Canada says building permits increased by 5.4 per cent across Canada, from 10,154 permits in 2014 to 10,698 in 2015. Permit registrations in census metropolitan areas (CMAs) also increased in 2015 by 7.9 per cent, representing 551 more permits than in 2014.

Regional activity

Eastern Canada remains the country’s largest region for permit registration, with 64.5 per cent; however, unlike 2014 when almost every region except for Atlantic Canada showed decreases in pool permit registrations, this was not the case in 2015. Every CMA in the Maritimes reported losses; however, areas such as Montreal, Quebec, Toronto, and Brantford bounced back. On the other hand, the Prairies and western Canada experienced some of the largest increases in issued building permits per CMA in 2015, with Kelowna leading the pack. (See the chart ‘Building Permits Issued for Swimming Pools in Major Urban Centres (2011-2015) below for details on specific municipalities.)

Building Permits Issued For Swimming Pools in Census Metropolitan Areas (2011-2015)

Region 2011 2012 2013 2014 2015
Canada 10803 12517 12052 10154 10698
Abbotsford 18 13 14 10 6
Barrie 197 280 211 170 163
Brantford 59 70 77 31 59
Calgary 47 48 37 36 36
Chicoutimi-Jonquiere
Edmonton 21 64 25 31 38
Guelph 61 64 82 59 42
Halifax 85 35 32 38 29
Hamilton 407 481 436 283 187
Kelowna 139 118 150 140 243
Kingston 44 51 62 42 36
Kitchener/
Cambridge/
Waterloo
155 250 171 146 86
London 229 223 205 153 144
Moncton 46 29 25 20 13
Montreal 3656 4783 4546 3763 4175
Oshawa
Ottawa/Hull/
Gatineau
171 165 186 15 170
Peterborough 57 81 66 46 46
Quebec 867 396 542 447 463
Regina 8 6 9 12 11
Saguenay 63 48 45 84 67
St. Catharines/
Niagara
213 209 201 192 179
Saint John 11 10 22 17 15
Saint John’s 14 12 21 22 23
Saskatoon 5 15 10 10 11
Sherbrooke 378 435 406 397 386
Sudbury 142 192 150 107 89
Thunder Bay 2
Toronto 503 693 458 228 279
Trois-Rivières 81 128 147 117 134
Vancouver 156 155 129 161 171
Victoria 23 13 10 6 13
Windsor 108 100 96 105 106
Winnipeg 153 178 125 106 125
Total Major Urban Area Permits 8119 9345 8696 6994 7545
The installation of residential swimming pools does not require a building permit in every municipality. Some areas issue permits for inground pools only. These figures are therefore conservative. Statistics Canada combined the Ottawa/Hull/Gatineau statistic. Source: Statistics Canada

Atlantic

Once again, a long, bitter-cold winter with multiple record snowfalls took its toll on the pool industry in Atlantic Canada. As a result, during the first six months of the year, which many will agree are the most important with respect to having a successful, prosperous season, this region was down 14.3 per cent after recording significant gains in 2014. That year, record summer temperatures helped this region out; however, this was not the case in 2015, as pool permit registrations continued to fall during the latter part of the season as well. Year-over-year, this region experienced a 17.4 per cent decrease.

More specifically, the pool permit registration gains experienced in Nova Scotia and Prince Edward Island in 2014 were short lived, as similar to 2013, permits fell in 2015 by 24 per cent and 16.6 per cent, respectively. On the other hand, New Brunswick continued its three-year downward spiral with a 24.3 per cent decrease. Weather certainly had a negative impact on the pool industry in New Brunswick and Prince Edward Island, as according to a Canadian Meteorological and Oceanographic Society (CMOS-SCMO) report, a nor’easter hit these regions hard in mid-February[3], dropping 450 mm (1.5 ft) of snow in the former and 800 mm (2.6 ft) in the latter.

One anomaly in this region occurred in St. John’s, Nfld. One year after experiencing the city’s hottest July on record, last July was considered one of the coldest (a 10-degree difference). In addition to this, the month was also the second wettest on record. All things considered, permit registration during the first six months of the year were up by 43 per cent year-over-year. And, despite the market dropping off throughout the remainder of the year (100 per cent in August alone), the province still recorded a 4.5 per cent increase in pool permit registrations.

This region represents 1.1 per cent of the total number of building permits issued in Canadian CMAs, which is the same percentage as 2014.

Top five major urban centres with increased building permit registration in 2015

Region 2014 2015 (+) Change
Montreal 3763 4175 412
Kelowna 140 243 103
Toronto 228 279 51
Brantford 31 59 28
Winnipeg 106 125 19

Quebec

Winter 2015 took a firm grasp of the pool industry in Quebec, just as it did the year prior, which delayed project starts and moved the idea of a pool installation down on the list of homeowner priorities. In fact, according to CMOS-SCMO, temperatures experienced in the province in February were almost 10 degrees below average. However, the cold winter and spring, which was followed by a not-so-balmy summer, did not stop this province from making a comeback of sorts with respect to the homeowner’s desire to put a pool in their backyard.

That said, after experiencing a 15.3 per cent decrease in pool permit registrations in 2014, the province rebounded in 2015 with an 8.5 per cent increase. Although the year did not start off on the right track (down 62 per cent in January), the industry heated up between the months of February and May with 2,596 registered permits, representing a 22.4 per cent increase year-over-year during this period. Although permits decreased slightly over the next two months (June and July), the province finished the year off strong with an 11.7 per cent increase in permit registrations over 2014. Interestingly, whereas only one of six CMAs in the province (Saguenay) registered increased pool permits in 2014, four (one more than in 2013) showed positive increases last year. Further, whereas Montreal accounted for 87 per cent of the province’s year-over-year decrease in 2014, last year The City of Saints led the rally with 77.5 per cent of all permit registrations. After two years in the top spot for decreased pool permit activity in all of Canada, this resurgence has seen the urban centre not only become the largest sector for pool permit registrations in the province, but also the country.

The city of Trois-Rivières, where pool permit registrations decreased in 2014 by 20.5 per cent also experienced a large turnaround in 2015 with a 14.5 per cent increase year-over-year.

Overall, the province saw 425 more pool permits registered in 2015, with Saguenay (20.2 per cent, 17 less permits) and Sherbrooke (2.7 per cent, 11 less permits) experiencing year-over-year decreases.

Quebec represents 71.4 per cent of the total number of pool building permits issued in the country’s CMAs, which is an increase of 2.4 per cent in comparison to 2014.

Ontario

Similar to its easterly neighbour, Ontario also suffered from back-to-back extreme winters. In fact, a CMOS-SCMO report said temperatures in Toronto, the provincial capital of Ontario and most populous city in Canada, were colder than Edmonton during February. It was the coldest month on record dating back to the 1840s. And, when spring finally arrived, it poured in buckets in June, providing the province with enough rain for the entire summer.

Once again, the weather in this province kept builders on standby as to when they could start building pools. Optimism is important in this industry, especially with the probability of facing yet a third consecutive season where it was questionable as to when Mother Nature would actually co-operate. That said, after permit registrations between January and April fell 23 per cent in 2013, and an additional 30.5 per cent (122 fewer permits) in 2014, who would have thought it would only get worse. In 2015, permit registrations decreased again; this time by 12 per cent.

Similar to trends seen in 2013 and 2014, permit registrations continued to decrease over the next four months (May to August). Although an additional 810 permits were registered during this period, it represented an 18.8 per cent decrease year-over-year.

Thanks to the weather, amongst other factors, the pool season has had a tendency to continue later into the year. In fact, this trend is highlighted by the increased number of registered permits between September and December. This period was the lone bright spot for the province as 369 permits (66 more than last year) were registered, representing a 21.8 per cent increase.

Of 15 reporting CMAs in the province, three showed no change (Oshawa, Peterborough, and Thunder Bay), while permit registrations decreased in eight and increased in four.

On the positive side, pool permits in Toronto increased by 22.4 per cent, from 228 in 2014 to 279 in 2015, which ranks third in the country in terms of increased building permit registrations. The city has not made this list since 2012. Pools were also popular in the city of Brantford where 59 permits were registered, which is 28 more than in 2014, representing a 90.3 per cent increase.

On the other hand, permit registrations in 2015 continued to decline in the region of Kitchener-Cambridge-Waterloo, which was down 41 per cent, as well as the city of Hamilton, which decreased by 34 per cent.

Ontario represents 18.9 per cent of the total number of building permits issued in Canadian CMAs, representing an increase of 3.4 per cent.

Top five major urban centres with decreased building permit registration in 2015

Region 2014 2015 (-) Change
Hamilton 283 187 96
Kitchener-Cambridge-Waterloo 146 86 60
Sudbury 107 89 17
Saguenay 84 67 17
Guelph 59 42 17

Prairies

From extreme frost conditions in the spring and wildfires in June to an early summer drought, tornadoes and hail storms, the Prairies (Manitoba, Saskatchewan, and Alberta) experienced a vast number of weather challenges across all provinces. According to CMOS-SCMO, half of the province of Alberta was under a fire advisory in June, while the spring mountain snowpack in the Rockies was less than half of what would be normally recorded. In fact, rain and snow across the Prairies were the lowest on record since 1947.

When looking at the region’s building permit records, and taking into account the climate conditions described above, it really goes to show how extreme cold, snow, and rainy conditions negatively impact the pool industry. Despite the destruction some of these storms can bring, only one of five CMAs recorded fewer pool permit registrations in 2015. The Prairies region experienced a 13.3 per cent increase in 2015 after declining by 5.3 per cent in 2014.

When looking at the individual CMAs, it is interesting to note pool permit registrations increased in Winnipeg by 58.3 per cent and despite permits increasing again by more than 20 per cent in Edmonton, the former knocked the latter out of the fifth position in the top five urban centres with increased building permit registrations in 2015.

Next to British Columbia, this region was one of the country’s most stable markets. For instance, Manitoba was up 18 per cent, Alberta increased by 10.4 per cent, while Saskatchewan held steady with 2014 permit registrations.

The Prairie region represents 2.9 per cent of the total number of building permits issued in Canadian CMAs, which is an increase of 0.9 per cent over 2014.

British Columbia

Similar to what was experienced in the Prairies, wildfires in British Columbia were extremely active, and according to CMOS-SCMO, May and June were two of the driest months on record. Further, the Pacific coast experienced yet another record-breaking year with respect to temperatures. In fact, it was 3.1 degrees above average between December and February, while total rainfall between May and August was only 34 mm (1.3 in.)[4]. In Vancouver, for example, the unseasonably dry and hot weather saw the region enforce Stage 3 water restrictions, which prevented the refilling of pools. These restrictions did not ease off until late September.

Despite these conditions, pool permit registrations between January and June in 2015 were almost 50 per cent higher than the average number of permits issued over the past six years. This region had a strong start to the season last year with 242 permits recorded during this period, representing a 62.4 per cent increase over 2014. A 246.4 per cent year-over-year increase was seen in June alone. Much like 2014, these good fortunes carried on throughout the rest of the season with another 191 permits issued between July and December in 2015, representing 21 more permits and a 13.5 per cent increase.

In 2014, three of the province’s CMAs recorded a decrease in pool permit registrations; however, in 2015, two managed to turn things around—one quite markedly in fact. After several years in decline, the city of Kelowna was a hot bed for pools in 2015, as 243 permits were issued last year, representing a 73.5 per cent increase over 2014. In the last seven years, this CMA has typically averaged 139 permit registrations. Another CMA which experienced a turnaround of sorts was Victoria. After reporting a 40 per cent decrease in permit registrations in 2014, this CMA had a 116.6 per cent increase in pool permits in 2015. Vancouver was also up 6.2 per cent year-over-year. Overall, pool permits increased by 36.6 per cent in 2015.

British Columbia represents 5.7 per cent of the total number of building permits issued in the country’s CMAs, which is an increase of 2.6 per cent over 2014.

 

The year of the staycation?

Last April/May, value of the Canadian dollar was hovering between 80 and 82 cents U.S.; however, what a difference a year makes. At the time of writing, the loonie has declined in value by 10 cents and the country’s economy decelerated in 2015—largely in the fourth quarter.

One positive outlook is the recent increase in the consumer confidence index, which posted its first gain in three months, as reported by the Conference Board of Canada. The national index climbed 3.7 points in February to 83.7; however, the results were mixed regionally, with Ontario, Quebec, and B.C. more optimistic, while confidence fell in Atlantic Canada, the Saskatchewan-Manitoba region, and Alberta. Ontario gained 7.6 points to 91.8, while Quebec added 4.1 points to reach 93.4.

That said, Mother Nature seems to be co-operating to some degree, as the past winter was nothing like what was experienced in 2013 and 2014; therefore, builders should be able to get an early start to the 2016 season. Further, should the Canadian dollar remain, or drop, from its current value, another saving grace for the industry this year may be the escalating costs to travel abroad.
As a result it is very likely homeowners will continue to turn to their backyards to create the ultimate staycation—a place where they can escape for relaxation and rejuvenation.

“Typically after a year like 2015, it makes the following year tough, but with the dollar being down like it is will keep people at home spending money on new pools and other renovations rather than travelling to other countries,” said Marvin Betz of Betz Pools, in Stouffville, Ont. “We still need decent summer weather to make 2016 a good year, however.”

References

With files from Statistics Canada (Investment and Capital Stock Division), the Conference Board of Canada, and Canadian Meteorological and Oceanographic Society (CMOS-SCMO). For more information, visit www.statcan.gc.ca[5], www.conferenceboard.ca[6], and www.cmos.ca[7].

This report and all of the figures contained herein are copyright to Kenilworth Media Inc. No use may be made of this or any part of the data or reproduction of charts or graphs without the express written permission of Kenilworth Media Inc. © 2016

Endnotes:
  1. [Image]: http://psm.poolspas.ca/wp-content/uploads/2016/04/15-12-01.jpg
  2. extremely different weather anomalies: http://cmos.ca/site/top_ten?a=2015
  3. nor’easter hit these regions hard in mid-February: http://cmos.ca/site/top_ten?a=2015
  4. 3.1 degrees above average between December and February, while total rainfall between May and August was only 34 mm (1.3 in.): http://cmos.ca/site/top_ten?a=2015
  5. www.statcan.gc.ca: http://www.statcan.gc.ca
  6. www.conferenceboard.ca: http://www.conferenceboard.ca
  7. www.cmos.ca: http://www.cmos.ca

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