In late March, the Ontario Ministry of Tourism
and Canadian Tourism Commission retained PKF Consulting to
monitor and study the impact of the then impending war in
Iraq on the Canadian Accommodation Industry. Shortly thereafter,
the study was broadened to include the impact of the SARS
crisis, which today dominates the study. Over 25% of our
National Trends participants took part in the study by completing
a Quarter 1 survey inquiring about 2003 budget expectations,
booking patterns, cancellations and Q1 demand changes by
origin and segmentation as well as attributing factors behind
the changes. To those who participated in the Quarter 1 survey – many
thanks. Please look for the Quarter 2 survey in late June,
as we continue to monitor the industry during these challenging
times.
The first report (Jan – April results)
will be posted on the both the Ontario Ministry of Tourism
and Canadian Tourism Commission’s websites at: www.canadatourism.com
and www.tourism.gov.on.ca. The initial report is insightful
in analyzing the effects of the Iraq War, SARS, on booking
pace, demand change and actual Quarter 1 and potential Quarter
2 cancellations. The 2nd report will be even more effective
in gauging the actual effects of SARS over the 2nd and 3rd
Quarter. The April Trends results foreshadow the devastating
effect SARS has and will continue to have on many of Canada’s
accommodation markets. Canadian hoteliers, now becoming accustomed
to crisis in the industry, expected nothing more than dreary
April results. Compared to April 2002, declines were experienced
in almost every Canadian market. Nationally, Canada’s
accommodation occupancy rate in April was 53.4%, down 7.3
points from April 2002. The strong gain in Quarter 1 demand
was eroded with April 2003 demand down 11.1%. Average rate
also lost ground after strong first quarter growth (up 1.7%),
declining by 3.5% in April, compared to last year.
During the month of April, with the onset
of SARS and the lingering effects of the Iraq War, Canada
as a whole lost $92 Million in room revenue in comparison
to last year. Of the total room revenue loss in April, $60
Million occurred in Ontario, $39 Million of which was in
the Greater Toronto Area, and specifically $30 Million was
amongst Toronto Downtown hotels. For downtown Toronto hotels
this translates into a $2,000 per room decline in room revenue
in April 2003 --- including food, beverage and other revenue,
this loss swells to $3,000 per room.
Across Canada the average hotel room was
down almost $300 per room in rooms revenue in April. Including
food, beverage and other revenue the loss was over $400.
Outside the Greater Toronto Area, Windsor was hardest hit
on a dollar per room basis, followed by Downtown Vancouver,
and Downtown Montreal.
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| Click above for a larger graph of room
revenue loss. |
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The uncertain timing of the SARS and US
economic recovery, continue to challenge any development
of a reasonable interim outlook. For now, all hoteliers can
do is wait and hope for a strong 3rd and 4th quarter.
Fran Hohol, Principal
Jeff Hyslop, Research
PKF Consulting
