As we hit the halfway mark of 2017, hotel pundits continue to define where the industry is at in terms of the cycle, with many wondering whether the industry is, in fact, at its peak.
Notwithstanding problems plaguing resource-driven markets such as Alberta, much of the country experienced strong fundamentals last year, and already the first quarter of 2017 shows signs of this year being just as strong, if not stronger. Occupancy remains solid in most of the country (averaging 64.5 per cent in 2016) as does RevPAR (average of $96 last year). Even ADRs have been inching upward in the past few years ($149 in 2016).
The continued fragility of the globe is also impacting the industry. Fortunately, many continue to view Canada as a safe harbour in an increasingly precarious world. Certainly, Donald Trump’s presidency continues to cause consternation around the world. In fact, a recent report from the Washington, D.C.-based Global Business Travel Association (GBTA) projects a loss of more than $1.3 billion in overall travel-related expenditures in the U.S. in 2017, including hotels, food, rental cars and shopping expenses that inbound travellers would have spent. That includes $250 million lost in spending from inbound business travellers from Europe and the Middle East. The greater concern is that the longer-term impact on business travel will become larger as companies begin to host meetings and events in other destinations. In an earlier survey of GBTA’s European members, 45 per cent indicated their company will be less willing to plan future meetings and events in the U.S. due to executive orders on travel.
In Canada, the news is better. With BMO forecasting the Canadian dollar to remain in the low 70-cent range against the U.S. dollar through the medium term, the tourism industry will continue to be a shining light, with Statistics Canada reporting that tourism was up by 9.4 per cent in 2016.
But beyond 2017, the federal government’s unveiling of its new Tourism Vision at last month’s Rendez-vous Canada bodes well for the future. As part of that vision, the government is intent on increasing the number of international tourists to Canada by 30 per cent by 2021, while doubling the number of Chinese visitors by the same year. The plan calls for the government to invest in stronger and more sustained marketing to promote the country, while addressing issues related to travelling to and within the country. Those expected changes should help position Canada to compete for a top-10 destination ranking by 2025, a marked improvement from its current number 17 status.