Yellowknife, N.W.T. - A report on the outlook for Northern hotels suggests developers should be watching Yellowknife carefully.

The report by the hotel consulting and valuation company HVS was released earlier this year and author Eric Wright said the outlook for the Yellowknife hotel industry is very good.

"There are consumers that are coming to the market that are willing to pay a higher price for a higher quality product, and that's been noted in a lot of the renovations that have been seen by a lot of the major hotels in Yellowknife."

Wright said hotels in both Yellowknife and Whitehorse have been able to sustain high levels of demand which has been quite unique during the economic downturn, but unlike Whitehorse, Yellowknife has been able to maintain a high average room rate.

"So they have really highly rated commercial business coming through, as well as government demands, so that's the main two attributing factors for the higher average rates in Yellowknife as opposed to Whitehorse."

Wright noted there are some challenges for new hotel development in the North including the high cost of construction and utilities but said there is evidence to support new hotel development in the Yellowknife market.

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