November 24, 2020
Ian McAuley of Aimbridge Hospitality opened with an original song about the Canadian hotel industry.
TORONTO — As snow began to fall and lockdowns intensified, the hotel industry was waiting on some good news. There were a number of bright spots at the CHIC Digital conference that started yesterday — an original song by Aimbridge Hospitality Canadian president Ian McAuley was truly amazing; HAC president and CEO Susie Grynol talked about a third vaccine with promising trials, and informed attendees of a new government program designed to give hoteliers cost relief; and YVR’s Russell Atkinson talked about progress re rapid COVID testing availability.
But everyone agreed that 2020 was painful, and full recovery is still a long way off. Indeed, the title of the first panel presentation was, “2020, A Real Oddity.”
Grynol told the conference that the recent Speech from the Throne had addressed all of the hospitality industry’s major asks, and in total, the federal government has provided $6 billion in support for the the industry. She provided a link for a new federal program that will deliver non-repayable relief to hotels in the hundreds of millions of dollars. But the situation is truly dire — Grynol said that 32 per cent of its members would be unable to cover their bills after the end of November, a date that is fast approaching, and 40 per cent of hotel employees have been permanently severed from the industry.
In the “Real Oddity” presentation, Carrie Russell, senior managing partner, HVS Vancouver, said that 2020 was truly painful. The worst week came in April, when Canadian hotels had 12 per cent occupancy, an 81 per cent year over year decline. By August, occupancy had risen above 40 per cent, but now it is down to 26.8 per cent, or a 55 per cent decline YOY.
Average daily rate was 42.2 per cent off last year’s rate in May, and is now 25.7 per cent off. “We’re looking at quite a different clientele, including [guests with] compassionate or heavily discounted rates due to long-term stays.”
Perhaps the most telling graphic she presented was the one showing demand declines thoughout previous cycles, along with recovery times that took longer as the demand decline numbers got bigger. “Recovery time was one to four years for previous cycles,” Russell said. “We don’t know what it will be for this one.” The prediction right now is for a pretty strong return to growth in the second half of 2021, as corporate and convention business come back, but that it will be 2024 before there is a full return to recovery.
Brian Flood, VP and practice leader, Cushman & Wakefield, said there has been very little transaction activity — in the third quarter, there were just six sales — and that buyers were looking at levels that were significantly down from 2019. He noted that there is a certain amount of stability due to the programs the federal government and lenders have put in place. He added that hotel performance was going to lag other sectors. “It will take a little time for travel to resume,” he said. “Air travel, business travel and conference travel provide the most concerns.”
Vancouver International Airport (YVR), has 84 per cent fewer passengers and 66 per cent less revenue in year over year comparisons, said Russell Atkinson, director, air service development and strategy, for the Vancouver Airport Authority (VAA). And a look at pandemic curves shows the U.S. and India, key markets for YVR, are doing the worst. “We saw 13,000 passengers per day in August, but performance dropped to 7,000 per day in November on a good day,” he added. Nevertheless, there is some positivity regarding vaccines and the availability of rapid testing is another reason for optimism. VAA has a rapid testing pilot underway with the University of British Columbia and Westjet.
The travel landscape looks starkly different from the beginning of the year, noted Danièle Gadbois, VP and head of sales for CWT. Companies are cautious and in a wait-and-see mode. There is a lot of uncertainty regarding travel restrictions. For business travel, health and safety and duty of care are absolutely paramount. “A lot of people will be asking, ‘Is it a mandatory, must-travel,’ and will be willing to pay more,” for trips that meet that criterion. She foresees longer and more extended business trips, with companies absorbing necessary costs. “There will be fewer trips and a bigger approval process, with risk management determining where people can and can’t travel.”
Gadbois also sees great potential in the Work from Anywhere movement. “The Starbucks coffee shop [business] could be transferred into hotel day rooms. We have great Internet connections, and people will continue to move towards an environment where they might start having meetings again.”