Posted on May - 31 - 2010
Expect less room at Canadian inns in the second half of 2010
After shrinking for four consecutive quarters through the first half of 2009, total spending on accommodation turned positive in the third quarter of 2009 and continued to expand through the fourth quarter.
By far the major contributor to this improvement was increased spending by Canadians, although spending by international visitors to the country contributed to the overall increase during the final quarter of the year for the first time since the fourth quarter of 2008.
There is clear evidence that tourism spending in general, and spending on accommodation specifically, gathered some momentum in the first quarter.
According to the most recent Trends Report by PKF Consulting, hotel occupancy in March of this year, at 56.3%, was up 1.4 percentage points compared to March 2009.
This increase in occupancy, together with a modest 0.6% increase in the average daily room rate, resulted in a 3.2% increase in the revenue per available room.
Across the country, the largest year-over-year increases in revenue per room in March occurred in Nova Scotia (+11.2%), followed by Quebec (+6.2%), Saskatchewan (+5.9%), and Ontario (+5.6%).
In Alberta the combination of a 2.0 point drop in occupancy rates, plus a 4.3 point decline in average room rates, caused revenue per room to decline
by 7.5%.
Looking ahead, Canadian hoteliers are considerably more upbeat about the outlook for both occupancy rates and daily room rates than they were in the second quarter of 2009, according to the latest Q2/2010 Business Conditions Survey of Traveller Accomodation.
In the second quarter of 2010, 24% of hoteliers expected higher occupancy rates, compared to just 4% in the second quarter of 2009.
Also, although the net percentage of hoteliers expecting higher room rates over the near term was still negative (-18%) in the first quarter, it was much improved compared to the third quarter of 2009 (-55%).
Given the pickup in consumer and business confidence and the improving employment outlook on both sides of the border over the past several months, hotel occupancy rates and room revenues should move steadily higher over the next several quarters.
Survey of hoteliers’ expectations regarding occupancy rates and room rates
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