Hotel markets are imporoving across the segment spectrum.
A good sense of humour is a great commodity to cash in on when times get tough. Jim Anhut, chief development officer, the Americas for Atlanta- based InterContinental Hotels Group, can attest to that. “No one got in trouble for having Holiday Inn on their expense report,” Anhut says, half-joking, while referencing the challenges of the recent past.
At present, there’s more reason for Anhut — and many others in the industry — to smile. The market continues to strengthen and all segments are seeing improvements in business. “Development might not be robust, but it’s definitely steady,” he says, noting that, in Canada, IHG has 34 hotels in its pipeline (Internationally, the company has 1,300 projects in development.).
Gopal Rao, IHG’s regional vice president of Sales and Marketing for Canada, is equally optimistic about the future. “We’ve had tough times in the past few years, but development is improving,” Rao says. “We’re seeing excellent growth in our mid-service brands, Holiday Inn and Holiday Inn Express. We have the biggest distribution of any chain in Canada and that makes us a good proposition for companies seeking a brand that is solid across the country.”
Anhut describes IHG’s large footprint and wide variety of product as a “one-stop shop” for corporate clients with broad needs (Shoppers Drug Mart, Golf Canada and the CPGA are just a few of its corporate partners.).In the past 18 months, the company has increased its sales force, which supports all IHG brands, by more than 200 per cent, to attract more business. IHG brands in Canada include full-service InterContinental, Hotel Indigo and Crowne Plaza; mid service Holiday Inn and Holiday Inn Express; and extended-stay, limited service Staybridge Suites and Candlewood Suites. While numbers were not available for Canada exclusively, IHG recently released 2010 figures for the Americas, which show occupancy is up 3.4 per cent at 61.5 per cent, ADR is down one per cent at $97.40 and RevPAR is up 4.9 per cent at $59.91.
Rao, who also chairs the Board of the Tourism Industry Association of Canada, hopes international tourism will be another boon for IHG moving forward. Canada’s Approved Destination Status agreement with the Chinese government in December 2009, allows Chinese travel agents to advertise and organize group tours to Canada.
“The ADS agreement is a huge opportunity for Canadian tourism,” Rao says. “In the early 1980s, Holiday Inn was the first international hotel brand to enter the Chinese market, so we have a strong customer base there. Now we can welcome more of those customers to our properties in Canada.”
While IHG’s mid-service brands continue to thrive on good value, its full-service properties are attracting more business as corporate travel and meetings pick up. “Many companies went on a travel hiatus,” Anhut says, “but those clients are starting to move again. Companies realize they need to bring their teams back together.”
As a result, IHG plans to expand all its brands in Canada, including Hotel Indigo locations in Ottawa, Toronto and Vancouver. “We’re very optimistic about the future,” Anhut says. “All of the fundamentals are returning. Everyone has more spring in their step.”
The brass at Toronto-based Realstar Hospitality, master franchisor for limited-service brands Days Inn, Studio 6 and Motel 6, is also looking forward with optimism. “We’ve got nothing but growth ahead of us,” says Irwin Prince, Realstar president and COO. “There’s an upward trend in reservations and occupancies, and the rate will follow. We’re clearly on the mend.”
In January 2011, Realstar opened a Motel 6 in Brandon, Man., — the brand’s first entry into the province. A second location is under construction in Headingley, Man., and construction will start on another Motel 6 in Swift Current, Sask., by summer 2011. Realstar also recently opened its first G2 prototype Days Inn, located near the Regina airport. The new look aims to bring a higher standard to affordable lodging and includes modern exterior and interior design with enhancements to guestrooms and public areas.
Currently, there are 89 Days Inn, 18 Motel 6 and one Studio 6 location in Canada, plus a handful in the pipeline. “There’s a lot of interest in this segment of the market and in our brands. The stronger the economy gets, the more opportunity there is for financing,” Prince says. He notes the company’s “spend less, travel more” tag line continues to attract, and domestic leisure travel is a strong market for Realstar. “Customers are frugal and we provide great accommodations that are affordable enough that they still have a budget for activities.”
Prince acknowledges challenges in the market, such as the strong Canadian dollar and a decline in tourism spending, as continued obstacles but remains positive about the future. “There’s greater confidence on the consumer side and on the business side,” he says. “We’re focused on growth and success.”
According to industry statistics, growth and success are factors hoteliers in every market segment should anticipate. “Everyone was impacted by the economic downturn, but everyone saw some improvement in 2010,” says Brian Stanford, director of Toronto-based PKF Consulting. “There’s more improvement ahead in 2011. The poor economy had a more negative impact on mid-priced and full-service segments, than on limited-service and budget-priced segments, so the recovery for the former is a bit slower,” he notes.
Industry averages for limited-service properties show 2010 occupancy increased over 2009, from 54 to 56 per cent, and is projected at 57 per cent for 2011, and ADR increased from $100 to $101 with $103 projected for the coming year. Plus, an upward trend is evident in the full-service segment as well. Occupancy increased, from 61 per cent in 2009 to 63 per cent in 2010, and is projected to hit 64 per cent for 2011. Full-service ADR grew from $130 to $134 and is expected to reach $137 this year.
Some hotels are already experiencing soaring success. The Thompson Hotel Toronto opened in July 2010, and business has been more than steady ever since. “The first three months are always challenging when you open a new hotel, but we actually exceeded 100 per cent in the occupancy index during that time,” says Stephen Brandman, co-owner of New York-based Thompson Hotels, which operates luxury properties in New York City, Los Angeles, Chicago and Washington D.C., with another set to open in London this summer.
“There’s so much going on at Thompson Toronto — a rooftop pool and bar, a screening theatre, our restaurant, Scarpetta, and our 24-hour diner, The Counter,” says Brandman. “Since opening, we’ve been able to drive customers to these destinations. The market in Toronto has been tremendous.”
This February, occupancy at the hotel was in the mid- 70s, and Brandman explains that, according to the Smith Travel Research STR Report, Thompson Toronto has a strong position in the market with higher RevPAR than many of its competitors in the city.
Thompson Hotels has plans for Canadian expansion, with potential locations in Vancouver, Edmonton, Winnipeg and Montreal. “We’ve proven the Thompson model can be successful in Canada, and we would love to branch out as we’ve done in the U.S.,” says Brandman — just another hotelier with plenty of things to be happy about, and that’s no joke.