In 1995, Canada had a rooms inventory of approximately
314,000 rooms. During the past five years, this inventory has
grown by approximately 11% to 348,000 rooms in 2000 – a
growth of 2.1% per annum.
Based on our Trends database, Canada sold about 174,000
rooms per day during Quarter 1 1995, resulting in a 55% occupancy
during the winter months. By 2000, demand levels improved
by about 12% during the winter period – 1.5 percentage
points ahead of supply growth.
During the balance of the year (Quarters 2, 3, 4), demand
levels increased by about 10% from 1995 to 2000. Therefore,
Canada is seeing stronger growth rates nationally during
Q1, as compared to Quarters 2, 3, and 4.
At first blush, these results look very encouraging in terms
of Q1 growth rates. However, the real test is in the
absolute demand increase as measured by rooms sold. Between
1995 and 2000, Canada sold 21,000 new room nights per day
in Quarter 1. However, during the balance of the year,
Canada is also seeing the same level of demand growth – that
is, an additional 21,000 new room nights per day. Therefore,
on a National basis, Canada is not losing ground in Quarter
1, but it is also not gaining ground compared to the balance
of the year.
Seasonality patterns vary between urban markets and resort
communities, with resorts impacted to a greater degree. Urban
markets derive their demand primarily from four sources,
whereas resorts are dependent on two primary sources
of demand. Generally speaking, urban markets attract
about 35% of demand from the corporate market; 35% is leisure
based; while 20% is meetings and convention, and the remaining
10% is Government and other discounted business. Resort
demand is generally 50% leisure based and 50% meetings and
convention business, and as such are more susceptible to
fluctuations in seasonality.
In terms of Average Daily rates, there was a $6.40 price
differential between Winter and Annual ADR’s in 1995. The
Q1 1995 ADR was $77.95 as compared to $84.35 for the full
year.
By 2000, this gap had moved up marginally to over $8.00. While
average annual rates grew by 32% between 1995 and 2000, Q1
ADR in 2000 was $102.50, as compared to $111.14 in 2000 – a
difference of $8.64.
Therefore, while we have seen demand growth in Quarter 1,
the accommodation industry has not been able to close the
price points between annual and Q1 results. The challenge
with winter tourism is not to discount rates in order to
grow demand, but rather to attempt to grow the price points
along with demand.
Some of the markets which have been successful in growing
Quarter 1 rates, above the National average include: Whistler,
Alberta Resorts, Ottawa, Quebec City, Toronto and Montreal.
Fran Hohol, Principal
Pannell Kerr Forster
