More than 16 months after COVID-19 first brought the Canadian travel-and-tourism industry to its knees, hotels continue to take a hit. And while some have fared better than others, 2020 will be remembered as a year when hotels across the country were faced with empty guestrooms, furloughed employees at both the corporate and property levels and a decimated meetings-and-conventions business.
While this year’s sales data may be lower than usual and the number of companies fewer than what is the norm, the levels of innovation and determination to succeed are high. The following pages will provide an overview of last year’s hotel landscape and shine the spotlight on what several operators have done to keep the doors open, while keeping employees and guests safe.
An industry in crisis
Tourism is consistently one of the fastest-growing industries in the world. In fact, the tourism industry in Canada is the fifth-largest, responsible for one in 10 of Canadian jobs, $2,260.9 billion in revenues and 2.3 per cent of GDP. But when COVID-19 hit, Beth Potter, president & CEO of the Tourism Industry Association of Canada (TIAC), says the industry imploded.
“The tourism economy has lost over half a million jobs, and unemployment in the sector has surpassed the national unemployment rate, according to a recent report by Destination Canada,” says Potter, adding the challenge is that tourism businesses, unlike other industries, are unable to pivot to online services and with different methods of revenue generation — including seasonal businesses — are outliers in many of the application requirements for current support programs.
According to STR’s year-end 2020 data, Canada’s hotel industry saw record lows in both occupancy and Revenue Per Available Room (RevPAR), while Average Daily Rate (ADR) fell to its lowest level since 2012. Year-over-year declines were the country’s worst across all three key performance metrics: occupancy fell 49.2 per cent to 33.1 per cent; ADR dropped to $130.43 (down 21 per cent); and RevPAR dropped 59.8 per cent to 43.11 per cent.
“With the global pandemic, 2020 was the most challenging year in our 93-year history,” said Stephanie Linnartz, president of Marriott International, Inc., in the company’s Q4 2020 financial report. “In April, we experienced the sharpest worldwide RevPAR decline on record, down 90 per cent year over year with just 12-per-cent occupancy.”
Sebastien Bazin, chairman and CEO of Accor, said in the company’s 2020 Integrated Report, “Accor was hard hit by the 2020 crisis, as were all players in tourism and hospitality. The historic pandemic had a drastic and far-reaching impact on our activities worldwide. During this challenging year, our group has forged on with its development and transformation. We successfully transitioned to an asset-light business model with the completed sale of Orbis. This new model has enabled us to better withstand the crisis.”
View from the top
Collectively, Hotelier’s Top 35 companies posted an estimated gross revenue of $7.5 billion for 2020 — a far cry from the total sales recorded pre-pandemic — with our top four companies (Four Seasons Hotels & Resorts, Marriott Hotels of Canada, Accor and IHG) accounting for $4.2 billion of that total.
Four Seasons Hotels & Resorts led the pack last year with an estimated $2,260.9 billion in sales globally for its 119 luxury properties. In 2020, the brand signed nine new hotel, resort and residential projects, tying a record for the most new deals in the company’s 60-year history.
Most recently, Four Seasons announced its expansion in Europe with a property in Italy’s southern region of Puglia, “In a time of unprecedented change and challenge for our company and the entire hospitality industry, we continue to innovate, remaining flexible in our plans and nimble in our ability to capitalise on opportunities, while maintaining momentum towards our long-term goals,” says John Davison, president and CEO, Four Seasons Hotels and Resorts in a March 2021 statement. “The impacts of the pandemic continue, and we are tackling these issues as they come. Yet more than ever, we are confident in the long-term success of the company and the dedication and resilience of our people who bring the Four Seasons brand to life each and every day. Our focus on the guest experience is steadfast, as is our ability to embrace new opportunities and continue to evolve.”
Marriott Hotels of Canada landed in second spot in 2020, reporting gross sales of $967.7 across its 255 properties. According to Lodging Econometrics’ (LE) year-end Construction Pipeline Trend Report for Canada, the company added 67 projects/8,250 rooms (a record-high project count) to its Canadian portfolio in 2020 and was one of the top-three franchise companies in the country. The company’s Fairfield Inn by Marriott brand was one of the top brands in Canada last year, adding 18 projects/1,722 rooms — an all-time high — to its pipeline.
At the height of the crisis, in April 2020, reservations for 90 per cent of Accor’s hotels were put on hold because of governmental measures, according to its 2020 Integrated Report, and of the company’s 110 locations, 90 per cent were subject to lockdown restrictions. At year-end 2020, the Accor’s North & Central America division reported $462 million in gross sales across its 28 properties.
“For the past five years, Accor has experienced record-breaking growth across North & Central America,” said Heather McCrory, CEO, Accor North & Central America in a January 2021 release. “The pandemic slowed down our industry, there is no doubt, but there are still strategic opportunities for expansion through conversions and new developments, especially for brands that offer a differentiated, meaningful guest experience, backed by a company such as Accor with a strong loyalty program, powerful distribution and operating and franchising expertise.”
Safe and secure
As COVID-19 forced the hotel industry to re-write the rules of the hotel game, hoteliers were forced to make daily changes in how they run their businesses while keeping guests and employees safe. Early on, hoteliers had to make instant adjustments to operating procedures — from eliminating buffets and replacing them with grab-and-go breakfasts to closing the pool areas and workout spaces to removing all collateral from guestrooms — all in the name of keeping guests safe.
But the biggest change came in the form of new and enhanced cleaning protocols, as an industry known for its high cleaning standards was forced to raise the bar even higher.
For operators, such as Aodhan Sheahan, vice-president, Operations of Calgary-based MasterBuilt Hotels, whose 20 hotels reported 2020 year-end gross sales of $30.4 million, it became clear early on that “this was going to be something significant. During a webcast last year entitled “Operating in the time of Corona,” organized by Big Picture Conferences and moderated by Sylvia Occhiuzzi and Nicole Nguyen of CBRE, Sheahan talked about how sanitation guidelines became front-and-centre and staff training intensified.
“We held on to fitness centres as long as possible. We asked ourselves if we could operate some of the services in a safe manner, we’d do it. We’re always leaning to safety without forgetting that we’re providing hospitality,” especially, he adds, for those guests staying longer periods of time. “But we needed to find the balancing act.”
As restrictions tightened and traveller confidence wavered, hotel operators around the world began unveiling new safety standards. In May 2020, Choice Hotels announced its Commitment to Clean Initiative, which provides enhanced best-practice guidance for cleaning, disinfecting, hygiene and social distancing to help protect the health and safety of guests, franchisees and their employees amid COVID-19 pandemic.
This complete approach to infection prevention included a close association with Ecolab, which helped ensure the company had the right infection-prevention programs and training in place to help prevent the spread of COVID-19. This included a new online resource hub available to franchisees, featuring operational best practices, training and resources from Ecolab’s industry-leading experts. Additionally, every Choice-branded hotel designated a “Commitment to Clean Captain,” who completed applicable best-in-class cleanliness training and was responsible for incorporating the new protocols into their hotel’s operations.
IHG, whose 194 Canadian properties recorded an estimated $480 million in gross sales for 2020, built on its Way of Clean program (first developed in 2015 in partnership with Ecolab and Diversey), expanding it to reflect the advice of regional and global health authorities, including the World Health Organization, Centers for Disease Control & Prevention, European Centre for Disease Prevention and Control and local public-health authorities in markets around the world.
“The future of travel may look different, but a safe, secure stay is fundamental to deliver true hospitality — and that will never change,” says Keith Barr, Chief Executive Officer, IHG. “By combining IHG’s world-class knowledge and processes with cutting-edge expertise from Cleveland Clinic, Ecolab and Diversey, we can reassure guests and colleagues that we’re focused on protecting their health and well-being. This includes looking at where technology can make a difference, deploying enhanced, highly visible and more-frequent cleaning measures and different approaches to food and beverage, all underpinned by our new IHG
In November 2020, Best Western Hotels & Resorts, whose Canadian operations had an estimated $315 million in gross sales for 2020, announced its enhanced cleaning program, We Care Clean, through its partnership with P&G Professional, adding Microban 24 Professional to its cleaning protocol. The program was implemented at all 2,300 Best Western-branded locations across the U.S. and Canada.
“Now more than ever, there’s nothing more important than providing a safe and clean home away from home for our guests and creating a healthy environment for our hotel associates,” says Ron Pohl, the company’s senior vice-president and Chief Operations Officer. “We’re constantly working to enhance our cleaning practices and protocols, and are proud to bring an added layer of protection to our hotels through this partnership with P&G Professional.”
On Oct. 15, 2020, Accor announced it had successfully re-opened most of its hotels, with 95 per cent of them having already adopted the group’s ALLSAFE cleanliness-and-hygiene protocols jointly developed with Bureau Veritas. At that time, Accor reported it had successfully certified 65 per cent of these hotels with the ALLSAFE label through a third-party review and accreditation process with professional auditors such as Bureau Veritas, SGS, Clifton and Ecolab with a plan to have additional hotels independently verified as ALLSAFE compliant over the following months.
The Road Ahead
According to an April 2021 article by Bill Argeropoulos, principal Canadian research practice leader for Toronto-based Avison Young, while numerous travel restrictions remain in place — both internationally and between some Canadian provinces — the recent uptick in vaccination efforts across the country provides at least one bright spot on the horizon. He says according to CIBC, Canadian consumers and businesses have amassed $170 billion in cash savings, and many people are looking to travel as one of their first activities post-COVID-19.
“With international and business travel still difficult, look for more domestic and intra-provincial demand as “staycations” could be the only available option in the near term, providing a source of optimism for some recovery in Canada’s hotel sector,” he writes. “Some industry observers have expressed expectations of a gradual recovery that could continue until late 2023 or early 2024, with leisure travel leading the way, followed by corporate travel and, finally, conventions or other large gatherings.”
Avison Young’s Canada Hotel Market (2020 Review and 2021 Outlook) says a successful vaccination program and the resultant re-opening of borders “could unleash significant pent-up demand for travel and tourism that would have an immediate positive impact on the hotel sector. Recovery in the commercial travel segment is likely to lag behind as companies determine their travel plans and budgets for the balance of the year.”
The report goes on to state that “under the current circumstances, owners of Canadian hotels are in the position of having to decide whether to hold on to existing non-performing assets in the hope that the industry’s return to pre-pandemic performance will be rapid, or disposing of assets at a discount in order to remain solvent. The likelihood is that market fundamentals will eventually return to pre-COVID-19 levels down the road, but the sector is still in for more pain in the short term.”
Written by Amy Bostock