Assetsoft - Blog #Hospatality

Canada's Hotel Industry Seems to Rebound in August

Mon, 13 Sep 2021 01:07:15 -0500

With the pandemic waning, most of Canada’s provinces have reopened using a step-by-step approach. For the country’s hospitality industry, this means more people, tourism, and revenue.

Last year, the hospitality industry was one of the hardest-hit sectors due to the pandemic. The hotel occupancy rates plummeted to an all-time low in April 2020, with 81.2% of the hotels being vacant. Now, the industry is already seeing a gradual recovery, with Toronto hotels having a 43% occupancy rate in July.

Adding to it, the Canadian government has introduced new measures which allow more tourists into the country. With these guidelines, more international tourists are willing to visit Canada for business and leisure. What does this mean for the Canadian hospitality industry? Read on to find out.

What was expected?

The sudden travel ban due to Covid-19 forced hotels to shut down or work on a low revenue. As the sector hit rock bottom, many industrialists were hoping to drive occupancy in the coming years. A study by HVS predicted a 15% rise in the market value of the Canadian hotel industry in the year 2021.

Hotels attempted to reduce losses by offering rooms and services at a discounted price. Yet, due to the Covid crisis, not many preferred traveling or staying at hotels. But, as predicted, 2021 has been a promising year for the hospitality industry.

According to CBRE, a commercial real estate company, hotel occupancies across major Canadian cities will range from 31% to 37% this year. Though these rates are far from pre-pandemic times, they are showing a gradual increase when compared to the rates in 2020.

What boosts the recovery?

With the vaccination rates increasing all over the world, more people are open to international traveling. Several countries, including Canada, have eased the guidelines and allowed international tourists to enter the country. From a surge in leisure tourism to essential business travel, many factors are boosting the hospitality industry in Canada.

Reopening of provinces

The country is gradually reopening provinces using a methodological approach. Some states are in the last stage of reopening, while others, like Ontario, are in the second or third stage.

Residents are seeing it as an opportunity to travel within the country. Boosting the revenue of the hospitality industry. A report by CBRE states that domestic travel is the key to driving hotel occupancy, with a 75% to 80% share in the total tourism revenue of Canada.

Provinces like Ottawa are coming up with programs to boost tourism. Hotels in the province are offering packages at discounted rates, especially for advance bookings.

International tourism

Canada welcomed the U.S. citizens and permanent residents back into the country starting August 9th. Lifting a 17-month travel ban across borders, the country mandated all travelers to be fully vaccinated.

Later, on Sept 7th, the Canadian government introduced new guidelines for international visitors from other countries. The measures make it easy for tourists, both essential and non-essential, to travel to Canada. Out of the several guidelines, visitors are required to produce a Covid-19 molecular test report and also be asymptomatic.

As international travel reopens, the industry counts on “revenge travel” by tourists who couldn’t travel during the pandemic. Even otherwise, the country can expect a surge in the hotel industry revenue due to non-essential travel.

Essential business travel

Business travelers from across the world want to travel again to boost their business. Many believe that their business will suffer without traveling. A survey by SAP Concur reveals that 96% of the participants are willing to travel for their business in the next 12 months. Among them, 36% want to stay in hotels on their next business trip.

What does the industry want?

Even though hotel occupancy rates are gradually rising, the hospitality industry is facing new problems. Several hotels are unable to return to the pre-pandemic condition due to the following reasons.

Labor availability

As the industry revenue plummeted, many hotels laid off employees due to the lack of business. Now, as the business recovers, hotels are finding it difficult to rehire staff. Very few have returned to their previous company and many have joined other businesses during the pandemic.

Vaccine Passport

The hospitality community is also pressing for a vaccine passport to keep its employees safe. Hotels will treat such passports as proof of vaccination, and allow customers to enter restaurants, lodges, and other buildings.

As the hospitality industry requires close interaction between people, a vaccination passport is essential to maintain the health of all its employees. As Tony Elenis, president of ORHMA, told CBC, vaccine passports are one of the most efficient ways to protect the industry from another lockdown in the face of the delta variant.

What can we look forward to?

Many industrialists believe that the hospitality industry will see a full recovery in the coming years. The HVS Hotel Industry Outlook report predicts a return to normalcy by the year 2024.

Even though tourism is increasing hotel occupancy, considerable revenue only comes from large bookings such as meetings and conventions. Currently, hotels are receiving fewer bookings from smaller groups for events and meetings. But larger conventions are generally booked in advance, hence, hotels are looking towards 2022 or even 2023 for considerable business.

Additionally, hotels are also relying on the increase in vaccination rates to boost their revenue. As Canadian guidelines require tourists to be fully vaccinated, increasing vaccination rates are making more people open to international travel.

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The Record Level Dip In Canada's Hotel Occupancy/Revenue: Will The Upcoming Mandatory Hotel Quarantine Help?

Mon, 08 Feb 2021 09:46:56 -0500

We've covered the pandemic's effects on real estate extensively by now. We've mentioned how many sectors have grown during it. Unfortunately, the hospitality sector isn't one of those.

Several news sites have covered the record lows experienced by the Canadian hotel industry. Travel restrictions and lockdown measures have taken a considerable toll. However, the upcoming mandatory quarantine for travellers has been suggested as a possible aid.

Is that the case? Let's find out.

General Rate Dipping for Hotels

CoStar has one of the best recent reports on the subject. Performance metrics for the last year saw severe harm from the WHO's declarations of a global pandemic. According to the article, the drop was immediate: 51% for demand and 60% revenue.

Naturally, occupancy fell 32 percentage points as well, dropping to a 33% average. Curiously, the warmer third quarter experienced the most robust demand levels. It dropped the next quarter again with the second coronavirus wave.

Urban Hotels: Biggest Damage

The drops weren't the same for the entire sector. Naturally, the urban side was the largest victim. Its reliance on group business resulted in more substantial declines than other categories, like resorts.

In general, limited-service hotels suffered fewer drops. Despite severe dips, the luxury sector also fared better than urban hotels. The need to avoid large crowds was the biggest hit for the urban sector. However, it favored smaller towns for leisure travel.

Hotel Supply

On the other hand, supply growth has remained relatively strong despite the pandemic and performance drops. The same CoStar article explains that the country has seen 5,000 new rooms opening.

Expectations for this year and the next one are also promising. However, experts estimate a volume drop in 2022 because of project opening delays. Hotel transactions also experienced a 19% increase from repositioning and hotel sales.

What Can Hotels do to Cope with this Crisis?

Luckily, things are unlikely to remain grim forever. This fall in hotel demand also comes from countless canceled trips. As time goes on, the wish to travel grows—especially with health measures demanding us to stay home.

That's why the list of tips from Hospitality Net relies mostly on this demand. Additionally, the promise of a potential vaccine for this year can also play a huge role in enabling travel again.

An Approach in Three Phases

The article breaks down the approach in three phases. The first phase touches on damage control as long as travel remains paused. The advice for hotels is to keep in touch with their customers via social media. While closed, hotels should strengthen their brand.

The next phase is the initial demand boost for travel. It should occur as regulations begin to ease, possibly including the vaccine's release as well. During this stage, hotels should boost their brand awareness. That also includes encouraging guests to book stays while adapting the experience to the industry's recovery.

Finally, the last phase starts after the initial boosts. It continues as demand goes back to normal, indeed once the vaccine is accessible. Marketing is still vital, but it'll probably go back to the standard. That includes creating packages and targeting your regular demographic.

The Ten Tips for Recovery

Aligning marketing with revenue management

Your recovery plan needs coherence with your revenue management and channel parity. Your booking perks, packages, special offers, and policies must align with each other. Your recovery strategy should dictate your marketing approach.

Improving websites

People will likely remain hesitant against crowds and visiting installations if it's not necessary. Your website should contain all the information they need to book their stay. Relevant information includes opening dates, health precautions, nearby attractions, and special offers.

Being flexible with cancellations

This advice lets you reassure potential guests that their bookings aren't a risky investment. With the importance of direct booking during recovery, flexible policies will prove critical to encourage visitors. It also helps develop brand loyalty.

Working with direct booking

Shifting distribution toward your direct channel will prove the most effective approach to boost your bottom line. The article mentions most revenue managers are planning to focus on OTAs. However, keeping healthy distribution mixes is still essential to maximize revenue.

Updating assets and information

All your digital assets must be up-to-date to make booking easier (and thus more attractive) for potential guests. Updates include whether or not your hotel is open and prevention plans. The mentioned flexible cancellation guidelines are also important.

Encourage re-booking over cancellation

You must try to recapture your bookings to maximize your profits. Remember that cancellations are bookings you've earned already. That means convincing your guest will be easier a second time. Implement email campaigns to encourage re-bookings with bonuses.

Consider feeder markets

The article mentions expectations for feeder market demand to pick up, especially with cautious customers booking a few months beforehand. Therefore, hotels should adapt their purchase offers accordingly during initial demand spikes.

Marketing according to demand increases

Demand won't be steady during the initial months. That means your strategy has to adapt to these swings appropriately. There's not much we can do to predict what every month will bring, so remember to check relevant news to update your approach.

Implementing CRM software

It will help if you stay connected with your customers, both past and new ones. Salesforce and similar apps can prove invaluable during recovery. You can create automated campaigns for capturing leads and promoting special offers.

Prioritize loyalty members

Finally, remember the benefits of brand loyalty. People familiarized with your brand will be more likely to book despite the uncertainty. Remember who these clients are and reward them accordingly.

What About the Obligatory Hotel Stay for Traveling? Could that Help?

Recently, the Canadian government announced new COVID-19 measures in the country. One of these measures includes obligatory hotel accommodation for travelers entering the country.

Luckily, the official Canadian government website has plenty of resources explaining these measures. As a general rule, the government recommends to postpone or cancel most travel plans.

The measures for exiting the country aren't too complicated. Entering is when things get complicated. For starters, travelers need to offer evidence of a negative molecular test not longer than three days before their departure time.

Other upcoming requirements include taking another test during arrival and spending three nights in an approved hotel until results arrive.

What Does this Mean for Travelers?

Air travelers will face the brunt of these measures. Firstly, they need to stay in an approved hotel around one of the airports taking international flights. That means the Vancouver, Calgary, Toronto, and Montreal-Trudeau international airports.

They must stay for three days in one of these hotels, except for specific, not-yet-disclosed cases. They also have to stay in their rooms until they have their test results, as mentioned. The main issue comes with the costs. They're responsible for paying for their rooms, food, transportation, security, and control.

They'll need to receive negative results and provide evidence of having a quarantine plan before they can leave the hotel. They're free to spend the rest of the two-week quarantine where they planned.

What Does this Mean for Hotels?

Not all hotels are eligible for quarantine. While still unreleased, there will be selection criteria for which hotels make it into the list. For now, we can rule out any hotel away from the aforementioned international airports.

Once the application process is made official, hotels will be able to assess the requirements. Those interested must submit an application form once the process opens. However, it's necessary to visit the official web page for updates.

Final Thoughts

The government hasn't released an official list or application process yet. Nevertheless, the measure is almost guaranteed. That means that preparation is vital. For now, our best advice is to wait and apply as soon as the list releases.

Additionally, we hope that our content and tips are helpful even for non-eligible readers. Make sure to stay on top of official announcements so that you don't lose your chance.