Introduction by Tony Pollard, Hotel Association of Canada
Yes it's been a tumultuous year and it is still going on. RevPAR nationally fell last year to $73 from $83 in 2008.
We are taking a beating nationally on occupancy, falling from 63 per cent last year to 58 per cent for this year. This will be our lowest level since 1992.
Sadly, ADR nationally fell to $125 from $131.
The recession continues to wreak havoc across most of the industry. The reality is that the hotel market has been impacted worse than expected.
In 2008, the lodging industry in Canada had total revenue of $21.9 billion. In 2009, this was down to $17.5 billion.
This was a loss of $4.4 billion.
In 2008, we employed 420,000 people. This fell to 320,000 employees. In 2009, wages were $8 billion for a reduction of $2.7 billion from $10.7 billion the previous year.
Taxes to all three levels of government totaled $8 billion in 2008. In 2009 taxes fell to $6.3 billion for a reduction of $1.7 billion.
It is a bleak picture of where the hotel industry currently sits. However the fundamentals are strong for the upcoming year.
The Canadian economy has caught fire much quicker than expected. Home and car buying are surpassing the most optimistic forecasts. GDP growth is now expected to be 3.2 per cent, up from 2.7 per cent predicted at year end.
On the government relations front HAC has been very busy.
The HAC continues to focus on making Canada much more accessible to visitors particularly from the United States. The current travel deficit has grown to record numbers and visitors from the U.S. are down 50 per cent from the levels 30 years ago.
In 2009 our travel deficit was more than $14 billion. Compare this to just over a billion dollars in 2000.
The new passport rules, the Mexico visa requirements and the increased CATSA or travel security tax makes this more urgent.
And the dollar is almost at par.
The Hotel Association of Canada continues to be seriously concerned about Bill S-226. The bill would amend the Criminal Code to make it illegal for provincial governments to operate video lottery terminals and slot machines anywhere other than casinos, race-courses and betting theatres. The bill was referred to the Senate's Legal and Constitutional Affairs Committee on October 5th. The Conservatives voted against it, the Liberals supported it. This party-line vote is a major concern.
The Bill has been heard twice in this Committee and there is some sentiment that there is no need to hear witnesses again. There is always the potential of a quick vote at the Third Reading.
The HAC and its members have written the clerk of the committee and each senator on the committee requesting an appearance before the latter to testify on the severe negative and constitutional impacts this would have. We are following this closely and it is at the top of our agenda.
The HAC is actively lobbying for the reduction in federal airport rents, and new bilateral air routes for Canada under the umbrella of the National Tourism Strategy as announced by Prime Minister Harper in our meeting with him on June 4, 2009.
When we were with the Prime Minister we specifically requested that ADS be made a top priority. In December, Prime Minister Harper announced ADS. We were the first to congratulate him.
Over the course of the last year the HAC has moved its government relations agenda forward. We were very pleased with the $312 million for tourism in the 2009 Federal Budget. The government was listening to us.
Unfortunately, the budget in February shows there is no new money and a cut to the CTC. We keep up the fight.
We continue to play a leading role with the National Travel and Tourism Coalition, lobby for new Air Bilaterals and lead the charge against SOCAN tariff increases.
Our Green Key Program now counts 1,210 properties across Canada. More than 62 per cent of all rooms across Canada are now participating.
As an export industry, the high Canadian dollar has a substantial negative impact on our visitation numbers. Changes to the Foreign Convention and Tour Incentive Program are necessary if the program is to meet the objectives of keeping Canadian tour packages competitive and encouraging foreign tour operators to sell Canada as a destination.
The Conference Board of Canada is predicting a rebound for British Columbia thanks to firmer external demand.
BC accounted for only two hotel trades in Colliers Hotels International's 2010 Canadian Hotel Investment Report. The average price per room was $117,000, the highest among the provinces apart from Yukon, where the lone trade was at $146,700 per room.
Colliers reports that seller motivation in BC and other western provinces was subdued, since owners were reluctant to sell their hotels after the lofty valuations of previous years. In 2008, the average price per room in the West was $167,000.
Vancouver, along with Toronto and Montreal, was among the downtown urban markets that experienced heavy pressure on ADR, contributing to RevPAR losses in 2009.
BC's accommodation industry saw room revenues rise by 3.3 per cent, seasonally adjusted in January, according to a report by Chemistry Consulting Group released April 30th.
This came as a result of gains in Mainland/Southwest (5.5 per cent), Thompson/Okanagan (6.5 per cent), Cariboo (4.0 per cent), North Coast (4.1 per cent) and Nechako (0.2 per cent), that were partially offset by a drop in room receipts in Vancouver Island/Coast (1.9 per cent), Kootenay (2.2 per cent) and Northeast (6.7 per cent).
The number of visitors entering Canada via BC slowed marginally by 0.2 per cent, seasonally adjusted in January as 1.5 per cent fewer Americans crossed the border.
While same-day visits from south of the border rose by 5.8 per cent for the third consecutive month, this was outweighed by a 4.9 per cent drop in U.S. travellers staying overnight, according to Chemistry Consulting.
Visits from overseas increased by 4.2 per cent, as more travellers visited from Asia (5.9 per cent), Europe (0.8 per cent) and other international destinations (7.1 per cent).
Alberta will benefit from the revival in drilling activity in 2010-but weakness in the labour market is a concern, according to the Conference Board of Canada's most recent provincial economic summary.
Labour shortages may be down but they will resurface, and both the provincial and federal hotel associations continue to lobby for strong support for the Temporary Foreign Workers Program.
Alberta has 281 hotels participating in the HAC Green Key program, representing 71.6 per cent of all rooms in the province.
Alberta has hotel industry revenues of $2.9 billion, employs 48,000 people and contributed $892 million to provincial coffers, according to the HAC's Economic Impact Analysis.
Alberta accounted for the lion's share of hotel sales activity in Western Canada, with most deals centred around the Calgary and Edmonton suburbs, according to the 2010 Colliers' 2010 Canadian Hotel Investment Report. But the price per room has dropped to $110,000 compared to an average of $167,000 for Western Canada as a whole in 2008.
In terms of RevPAR losses, "by far the most severely impacted markets were northern Alberta communities where demand dried up when recessionary pressures stalled energy investment, resulting in RevPAR falling by about a third in many of these markets," according to the Colliers report.
The report added that Edmonton is one of the cities with the most hotel supply, reporting a 3.9 per cent increase in 2009 over 2008.
For the first two months of 2010, Alberta's overnight direct entries by international visitors (U.S. and overseas) decreased by 7.5 per cent, compared to the first two months of 2009. For Canada the decline was 2.3 per cent, according to Travel Alberta.
According to the Conference Board of Canada's most recent provincial economic summary, a revival in potash production will fuel Saskatchewan's economy over the next two years.
The only notable markets with RevPAR gains were Regina and Saskatoon, according to Colliers International Hotels' 2010 investment report.
Hotel values in both Regina and Saskatoon grew by 3.5 per cent in 2009, according to the Colliers Hotel Value Index. These two cities are expected to lead growth in 2010 as well.
Saskatoon, with a population of 256,300 and median income of $84,000 has seen 1.6 per cent growth since 2006, according to Betsy MacDonald, managing director of HVS International Canada. HVS projects that hotel occupancy will be steady.
New projects in Saskatoon include a $40-million, 11-storey Holiday Inn with 179 rooms that should be ready for occupancy in late 2011.
In Regina, a Hilton Garden Inn and condo at Victoria and Albert Streets, will be the tallest building in the city when completed, and will contribute to revitalization of the city centre.
A new, enclosed stadium and multi-purpose facility will be constructed in the City of Regina. Through its DMF, the Regina Hotel Association committed $10 million over 15 years to develop the facility.
Smoking is still a big issue in the province, according the Saskatchewan Hotel & Hospitality Association. The SHHA applauded Health Minister Don McMorris's decision not to expand the ban of smoking on bar, tavern and restaurant outdoor patios and decks.
Since 2005, the year the ban was introduced, 62 hotels, mainly in rural areas, have closed their doors and the majority of these closures can be attributed to the smoking ban.
Manitoba's hospitality industry remains one of the strongest in Canada.
And Winnipeg was one of the few cities that reported growth in hotel value according to the Colliers Hotel Value Index, adding an average of 1.6 per cent to their value in 2009.
With 742,000 people, Winnipeg has an average annual income of $54,000, the lowest of Western cities.
While the total hotel market is down, Winnipeg has kept its rates up during the recession and should experience slow, steady growth, according the HVR's MacDonald.
According to the Conference Board of Canada's most recent provincial economic summary, a slowdown in private non-residential investment will keep the economic rebound more modest in Manitoba, New Brunswick, and Nova Scotia in 2010-11.
Colliers reports that Winnipeg was one of the cities with the lowest levels of new supply, with only 0.4 per cent supply increase in 2009.
Major construction projects in Winnipeg include the new James Armstrong Richardson International Airport terminal and the Canadian Museum for Human Rights.
Asked what he'd like visitors to the recent Rendez-Vous travel and tourism show to take away from their visits to Winnipeg, Hubert Mesman, president and CEO of Travel Manitoba said, "We'd like them to leave with a sense that they've discovered something wonderful and unexpected about Manitoba that they can sell to their clients: the amazing array of outdoor activities including fishing, hunting and wildlife viewing; great urban and rural culture, such as major performing arts and festivals and events. Time and again, visitors tell us they didn't know what to expect in coming to Manitoba, and they leave with a new appreciation for the people and the place."
Ontario, along with BC, will lead all other provinces this year, according the latest report from the Conference Board of Canada. Firmer external demand is supporting a strong rebound for those provinces.
And in its February report, the Conference Board reported that "Ontario is forecast to outpace the national average for the first time in nearly a decade in 2010. The provincial economy has been picking up speed over the last few months."
But last year the story was not as positive.
There were 48 hotel transactions reported by Collier International Hotels in their 2010 Canadian Hotel Investment Report. Ontario had the lowest pricing of any province except PEI, with the average price per room at $54,600 compared to $79,500 in 2008.
Pricing was notably lower than in prior years in areas impacted by cross-border travel and manufacturing-dependent economies.
Toronto was among the downtown urban markets experiencing RevPAR losses last year, and the resulting pressure on ADR contributed to declines greater than the national average.
"In what could take years to rebuild, downtown Toronto, for instance, ended the year with an ADR just slightly above levels from 2003, which ... was a year characterized by a series of unpredictable events that eroded performance," according to Colliers International Hotel's 2010 investment report.
Toronto Airport West led the list of decliners in the Colliers hotel value index, losing 14.7 per cent of value in 2009.
Toronto Downtown was also among the decliners, with value down 10.2 per cent. Colliers forecasts that values will remain weak in 2010 for Toronto North/Parklands and Toronto Airport.
QUEBEC
Quebec's economic recovery is stronger than initially anticipated, according to the Conference Board of Canada's most recent provincial economic summary. Job creation has been robust in the past six months.
Quebec as a province accounted for 12 hotel trades, worth $100.7 million, commanding an average price per room of $63,800, just below the country-wide average of $65,000.
Like other downtown urban markets such as Toronto and Vancouver, Montreal incurred heavy RevPAR losses thanks to heavy rate pressure.
Montreal Airport had the greatest increase in supply of any Canadian market, reporting a 9.3 per cent increase in 2009 over 2008, according to Colliers figures. On the other hand, Montreal Downtown had the lowest level of new supply, increasing only 0.1 per cent from 2008 to 2009. Two hotels in this market were removed from the inventory.
On the Colliers Hotel Value Index, Montreal Airport had one of the stronger value declines among the markets, with value declining by 8.7 per cent over 2008. Colliers forecasts that the Montreal Airport market will remain weak in 2010.
In his speech at last month's Canadian Hotel Investment Conference, David Larone, director, PKF Consulting, called Montreal a "challenged market."
Room rates have been stuck at $130 for at least 10 years, the convention centre has become a competitor to the hotels, not an ally. On the positive side, the Grand Prix is back for the next four or five years, and a Rotary Convention is in the offing.
"There has been a lot of supply over the last few years, and that is part of the problem," Larone said.
He noted that in Quebec City, RevPAR declined by 11 per cent, as the city was unable to retain the high rates of 2008, when it celebrated its 400th anniversary. Larone also noted that Cirque du Soleil will continue to provide its free show, "Chemins Invisibles" for the next four years.
A modest recovery is in the cards for 2010/11 in New Brunswick, according to the Conference Board of Canada's most recent provincial economic summary. Like Nova Scotia and Manitoba, the province has been hit with a slowdown in private non-residential investment.
The good news is that New Brunswick, like the other Atlantic provinces, did not falter as much as Ontario and the West during the recession.
Occupancy rates year over year remained constant in the province, with January and February figures down 1 per cent, and March figures up 1 per cent, according to data from New Brunswick Tourism and Parks.
The province reported 35 per cent occupancy in January, 45 per cent in February and 47 per cent in March.
The occupancy picture varies by area of the province. Miramichi to Moncton reported a 10 per cent increase year over year in February, and a 24 per cent increase in March.
Occupancy was also up in the Hillsborough to Alma (via Fundy) area, which also reported double-digit increases both months.
On the other hand, the area from Fredericton to Sussex saw decreases in occupancy of 16 per cent in February and 5 per cent in March.
The province is in the midst of its 2008-2011 Tourism Strategic Plan. Its mandate is: to develop a competitive, sustainable tourism industry; to provide leadership for the tourism industry in New Brunswick; to promote the province as a year-round tourism destination; and to act as a steward of the province's tourism assets.
Fredericton's new convention centre is scheduled to open in December 2010. Features will include a 12,500 square foot ballroom; 7,400 square feet of flexible meeting space, ideal for break out sessions, executive board meetings, and special events; state-of-the-art technology and complimentary wireless Internet. The facility will be integrated with a 700 tiered soft seat theatre, ideal for a plenary or guest speaker.
Slow and steady is the catchphrase for the Nova Scotia economy, looking towards the coming year.
Occupancy statistics for Nova Scotia remained almost constant during the first two months of 2010, according to numbers from Nova Scotia Department of Tourism. The occupancy rate for the province was 31 per cent in January, 40 per cent in February, for an average of 36 per cent. This represents a one per cent dip in January, and unchanged numbers for February and for the first two months year over year.
David Larone of PKF sees Halifax as a balanced market. "It's got no highs or lows-just a steady pace," he said.
Larone noted an abundance of projects for downtownHalifax are on the books, but that nothing is cast in stone. His perspective for Halifax is optimistic.
Room nights sold showed a similar trend, with a one per cent decrease in January, no change in February and a one per cent dip overall.
In Halifax, meeting and convention activity averages a direct spend of $76 million to $78 million per year.
A new convention centre for Halifax is in the works. The Halifax Regional Municipality and the Nova Scotia government announced an agreement last month to push ahead for a new convention centre in downtown Halifax. The new Nova Centre should be up and running by 2013.
Nova Scotia premier Rodney MacDonald said between June and the end of February, Halifax lost the chance of hosting at least 60 international conferences because the facilities at the WTCC "didn't measure up" anymore. "We lost out on over 86,000 room nights and we lost out on a total impact of $65 million to our economy," MacDonald said.
The convention centre is expected to cost between $100 million and $200 million. The developer, the Rank Group, is responsible for a second section that includes an 18-storey hotel and 14-storey office tower.
PEI, along with the other Maritime provinces, will post real GDP growth of 2 per cent or less in 2010. The Conference Board of Canada notes that it is one that was not hit as hard by the recession.
Occupancy figures for the first couple of months of 2010 are trending upward, though it's early to tell how robust the trend will be.
Total room nights sold were up 8.6 per cent year over year in January and 7.7 per cent in February, for an average of 8.1 per cent for the two months. These figures are from the Prince Edward Island Tourism Indicators report.
Occupancy was 21.8 per cent in January and 33.3 per cent in February, for an average of 27.2 per cent for the two months. This translates into an increase year over year of 0.9 per cent in January and 2.7 per cent in February for an average of 1.6 per cent for the first two months of the year.
Prince Edward Island had one hotel sale noted in Colliers' report, with the lowest price per room in the country, at $19,300.
In other indicators, bridge and air traffic were down 0.4 per cent and 2.0 per cent respectively.
Charlottetown is going through a growth spurt, according to a blog by John Morris called john.morriscode.ca. Projects include the 10-storey Homburg Hotel and the tunnel from the Confederation Centre of the Arts to the Confederation Court Mall, part of Homburg's $45 million dollar investment into Charlottetown.
Tim Bank's APM is trying to get a new $22 million dollar hotel in Charlottetown, named Welsh-Owen Hotel and Plaza Development. Banks is looking to develop a 120-room hotel, a parking garage with about 63 spaces, 14 fully furnished apartment units and six condominium units.
Banks says the development will be contingent on the province proceeding with the proposed multimillion-dollar convention centre in Charlottetown.
Newfoundland and Labrador recently assessed the first quarter of 2010 and found that the province is having a very positive start to the season.
"We performed very well in 2009, recording an almost one per cent overall increase in visitation at a time when the national and international tourism industries were feeling the negative effects of the global recession," Terry French, Minister of Tourism, Culture and Recreation, said in a release at the end of April.
"We expected 2010 to be a good year, given our ongoing multi-media marketing efforts and the number of special events and opportunities available to us. But to have such encouraging numbers so early in the year bodes extremely well for the industry, especially since the impact of our promotion of Newfoundland and Labrador during the 2010 Vancouver Winter Olympic Games, the JUNO events held here earlier this month, and the upcoming 400th anniversary celebrations in Cupids, are not yet reflected in these numbers."
There are 146 properties classified as hotels in the province accounting for 6,100 rooms. 122 properties operate on an annual basis while 24 operate on a seasonal basis. 53 properties have 30 + rooms.
The year 2006 was the last time tourism activity was officially measured against provincial GDP. At the time, tourism represented approximately 1 per cent of the total GDP. Tourism is at approximately the same levels as Agriculture, Foresty and Fishing/Hunting and Trapping.
Tourism supports approximately 13,000 jobs in the province, contributing approximately $850 million to the provincial economy each year.
Last year, the province set out seven strategic directions for its Uncommon Potential program. The ultimate goal of Uncommon Potential is to double tourism revenues by 2020.
Since 2003, the provincial government has more than doubled its investment in tourism marketing, from $6 million to $13 million.
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