Two decades after Hotelier launched as a quarterly publication, the industry and the magazine have both grown up
Another year, another milestone. As the hotel industry battles through yet another economic downturn, Hotelier magazine celebrates two decades of achievement. And what a ride it’s been. Since March 1989, when Hotelier debuted as a quarterly publication, Canada’s hot
industry has survived and thrived through three economic downturns, the devastating impact of 9/11 and the onslaught of SARS.
And though there were no roadmaps for these watershed moments (in Canada, 780,000 room nights were cancelled in September and October 2001, resulting in a $180-million loss), the industry emerged stronger, more dynamic and resilient than ever.
In some respects, the more things have changed, the more they’ve stayed the same. Or have they? Those who have lived through the gyrations of the past two decades know the fundamentals haven’t changed dramatically. Hoteliers still struggle for the highest room rate by motivating their staff to deliver the best possible service; they also feel the sting of taxation and outside forces on their business; and they continue to debate the importance of global marketing to drive business. So what’s really changed?
At its core, the hotel business is commodity driven — selling a room at the most competitive rate is the basis of the business. But hotels are more than commodities and the hotel landscape is vastly different than it was in the late 1980s. Back then, hotels were little more than places to put heads in beds, whether customers were travelling on business or pleasure. Today, people look for an experience when staying at a hotel. And just as importantly, hotels have become a key part of a city’s social fabric — cool destinations that attract local guests to their swank restaurants and bars — and, these days, to their serene spas as well.
Bed, Bath and Beyond
A mere 10 years ago, few hotels in Canada offered the luxury and calm oasis of a spa, but in the past decade they’ve proliferated across the country, both in resort destinations and in city centres. When the Stillwater Spa opened its doors in Toronto’s Park Hyatt in 2001, the $5-million venue set a new standard for hotel spas. Today, it’s hard to imagine a new, luxury property opening without a spa. Blame it on the hectic nature of life, or the growing sophistication of consumers; the reality is there’s a new revenue stream for hotels to explore with stiff competition to see who can introduce the splashiest of spas.
Spas have also spawned a new fascination with luxury and pampering. Today, wellness centres are front and centre but so are luxuriously appointed bedrooms featuring comfortable beds, plush, quality bedding and luxe, oversized bathrooms with eco-efficient showerheads.
It’s part of a movement to personalized service, a trend sparked by the introduction of boutique hotels in the new millennium. With their emphasis on personalized service and cool, intimate spaces, boutique properties have shown hoteliers how to differentiate their hotels from the pack. One of the early pioneers of the boutique concept was Christiane Germain, who garnered Hotelier’s Pinnacle Award in 2001. Additionally, hotels like Toronto’s Drake and the Gladstone have helped shape a different image of what boutique hotels are all about, fusing good food, local art and functional event space with cosy, fashionable lodging.
With wireless connectivity embedded in our daily lives, today’s consumers are more tech savvy and infinitely more demanding of the tools they want when they are away from home. Remember when fax machines and 24-hour business centres were considered innovative? The introduction of the Internet in the mid-1990s forever changed the way hotels marketed themselves, with many consumers now making their travel decisions based on a company’s Internet presence.
As part of the tourism infrastructure, the arrival of casinos in Canada created yet another layer to the industry. In 1990, one casino
operated in the country — the Crystal, in Winnipeg’s Hotel Fort Garry. Today casinos dot the landscape from, Nova Scotia to B.C. generating more than $6.7 billion in revenue in 2007, an increase of more than 55 per cent in the last half decade.
The Changing Landscape
For many years, three major hotel chains dominated the landscape in Canada: Four Seasons, Canadian Pacific Hotels (now Fairmont Hotels) and Delta Hotels. Though all three still exist today, in one form or another, their structures have changed dramatically.
Four Seasons, which was the focus of Hotelier’s first cover story in 1989, continues to be one of the country’s most respected and lauded companies. Founded by Isadore Sharp in 1961, and for many years run as a private company, the chain is now owned by Saudi Prince Alwaleed bin Talal, Bill Gates and Sharp. With only three properties in Canada, its growth and development takes place internationally, with recent additions in Mumbai, Florence and Riyadh. More than 30 years after opening its flagship Yorkville property in downtown Toronto, in what was once formerly the Hyatt, the company is primed to open its newest hotel at Bay and Yorkville late in 2010, ushering in a new era.
Fairmont Hotels shares a similar story arc. In the late 1980s the company operated as Canadian Pacific Hotels, doubling its size by acquiring CP Hotels. In the process it became the keeper of Canada’s iconic railway hotels, revamping them to the tune of $600 million and making headlines with new eco-conscious initiatives. Two years ago, after another acquisition, this time by Colony Hotels and Kingdom Hotels, Fairmont was privatized. Like Four Seasons, it remains headquartered in Toronto, where it manages 91 units in 16 countries, but very little development is expected to occur domestically during the next decade. With new president Thomas Storey at the helm, the company recently opened its first property in the People’s Republic of China, one of 30 new projects being developed worldwide. “The brand is transitioning from a North American to a global brand,” Storey said in a recent issue of Canadian Business about Fairmont’s evolution as a hotel company.
Bill Pattison founded Delta Hotels & Resorts in 1960, and the company has undergone various transformations since. Formerly part of Real Star and then Fairmont Hotels, in 2006, the company was sold to Silver Birch Hotels and today operates as a division of that company. It remains one of the few innately Can-adian hotel companies, with new CEO Hank Stackhouse expecting growth to continue across the country.
Who Owns What?
Though most hotel guests don’t have any inkling about who owns the property they’re staying in, ownership plays a pivotal role in how companies grow and how the industry evolves. Twenty years ago, the nation’s largest hotel companies were Canadian-owned and
operated. But with the advent of REITs in the early 1990s, consolidation came fast and furious.
While the trend started in the U.S., Canada didn’t see its first hotel REIT until June 1997 with the introduction of Legacy Hotels, followed by Royal Host in October and Canadian Hotels Income Properties in November. Established to provide dividends to investors through profits made on a pool of hotel real estate assets, they increased Canadian hotel investment from 30 per cent to 74 per cent in 1997. In 1998, REITs accounted for 32 per cent of Canada’s total transactions, with Royal Host acquiring 18 properties for $170.2 million, CHIP purchasing 13 hotels valued at $160.5 million and Legacy purchasing three hotels for $92.8 million.
That same year, to help make sense of the mergers and acquisitions that were occurring at a frenetic pace, Hotelier took the lead by launching the much acclaimed “Who Owns What?” poster. It’s become a valuable, important tool, helping readers understand the changing complexity of the landscape. Interestingly, while consolidation continues, the impact of hotel REITs is slowly eroding given changing taxation legislation.
Movers and Shakers
Everyone knows people are the heart of the hotel business. And looking back over the past two decades, it’s hard to imagine this
industry without icons such as Isadore Sharp, Bill Pattison and Simon Cooper. Robert de Mone, though not a hotelier by trade, created a lasting legacy for Canadian Pacific Hotels. Chris Cahill moved that legacy forward and recently passed the torch to new president Thomas Storey.
Certainly others like Michael Beckley, who arrived in Canada through his association with Commonwealth Hospitality, have helped put Marriott Hotels on the Canadian map and worked to improve the state of the industry by lending his name to many worthwhile causes. Executives like Kenny Gibson of Westmont Hospitality have been at the fore, adding to his company’s stable of assets and now controlling a large chunk of properties across various segments. In less than a decade, Steve Gupta’s entrepreneurial zeal has also been well documented. From humble beginnings, Gupta has emerged as one of the industry’s most dynamic and prolific power brokers.
One of the issues still working itself out in the hotel industry is a scarcity of women in its corporate offices. With the exception of a handful of executives (Katie Taylor, who helms Four Seasons; Christiane Germain, who runs The Germain Group; Anne Larcade, who operates fledgling Sequel Hotels & Resorts; and Nancy Adamo, who owns Hockley Valley Resorts), there are few women running hotel companies. And the same holds true on the managerial side. Clearly, it’s still a man’s world.
As B.C. readies to welcome the world for the 2010 Olympics, the hotel industry is poised for its next evolution. It’s expected the Olympics could generate as much as $10.7 billion, with more than 350,000 people expected to attend.
Certainly, these are heady days for Vancouver. The opening of the Shangri-La Hotel heralds an exciting era for the West Coast as four properties have recently opened with several others expected in the next 12 months. With the recent announcement that Canada has moved from ninth position to fifth as a global travel destination, the future looks bright.
Activity isn’t just relegated to the West Coast either. Mammoth mixed-use projects have sprouted in cities across the country. In Toronto, five new upscale hotels will be opening during the next two years, including the Thompson Hotel, the much-anticipated Ritz Carlton (there have been plans to bring this brand to TO for the past 10 years), the Trump Towers, the Shangri-La and a new Four Seasons. Similarly, several new hotels have opened in Montreal in the past year, including Le Cristal and Aloft.
So what can we expect in the next decade? History has taught us change is the only constant in life. And with the economy continuing to make headlines, bold new ideas and approaches will be demanded in all segments. Whether it’s strategies to drive new growth, radical ideas that will shape new business or product innovations that will appeal to discerning guests, hotels will continue to be reinvented with greater flexibility, more speed and, as always, more attention to what the customer really wants.