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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