TORONTO – The hotel industry gathered last week at the Sheraton Centre Toronto Hotel for the annual Canadian Hotel Investment Conference (CHIC). It was the first live edition of the event since COVID-19 forced organizers to pivot to a virtual event in 2020.

The program kicked off with a tribute to Hotel Association of Canada (HAC) president Susie Grynol for her tireless efforts on behalf of the industry over the past two years.

“You have built a world class advocacy organization truly changed the face of what happened compared to what it used to be,” said Roz Winegrad, AVP, Owner and Franchise Services, Marriott Hotels of Canada. “You’ve activated the broader hospitality community and organized all of us around the issues. You work with an unbelievable sense of urgency…and have clearly saved our industry, advocating tirelessly to achieve hotel- and owner-support programs. And you are relentlessly focused on the needs of the community. We know you as someone who’s strategic, formidable, tireless, an extraordinary leader, and a wonderful friend.”

The first panel of the day, moderated by Carrie Russell, senior managing partner at HVS, offered insight from leading experts on the latest on transactions, capital, valuations, and critical data points. Panellists — included Anthony Cohen, executive VP & partner, Crescent Hotels & Resorts Canada and president & CEO, Global Edge Investments; Curtis Gallagher, principal, Canadian Hospitality Lead at Avison Young; and Alam Pirani, executive managing director, Hotels, Canada & Caribbean at Colliers Hotels also addressed what the next couple of years may look like, which markets and asset classes will lag and which are poised for a robust recovery.

“We’re obviously well into the re-bound,” said Russell to set the tone for the discussion. “Our projections, and I think we’re kind of on track with the forecasts that are out there, is that the recovery is going to [happen] somewhere between 2023 and 2025 ― 2024 is the safe bet. In 2022, we’ve already seen a strong first quarter; revenue was up almost seven per cent in the first quarter.”

While the panel acknowledged that March numbers are showing a much tighter trend, hotels still have a lot of rooms to fill to get back to where the industry was pre-pandemic. “So, what’s going to bring back the travellers that we desperately need to get back to the numbers?” asked Russell.

“If we look at our group bookings for the year ahead, it’s all about consumer confidence,” said Cohen. “It’s going to take a little while. And part of it is also, as companies figure out how they get back to work, it’s going to be that social aspect of how much you want to interact with people.”

Panellists also shared some of the learnings they are taking away from the pandemic.

“We’ve learned that the hotel industry is too important to fail,” said Gallagher. “And we saw the government stepping in supporting [the industry]… if this industry fails dramatically, everything else messes up as well.”

The next session, Controlling the Uncontrollable: Insurance and Property Taxes Examined, featured insight from Terry Bishop, president, Property Tax, Canada, Altus Group; Lilli Chiu, assistant vice-president/senior risk consultant at HUB; and Kinnari Lakhani, senior vice-president at Arthur J. Gallagher Canada Ltd.

The discussion, moderated by Christine Kennedy, vice-president, Finance at Atlific Hotels, centred around how and why these two “fixed” costs are not so stable, what owners can expect and, more importantly, how they can fairly manage these costs in the next few years.

“While the pandemic has had a catastrophic impact on the hospitality industry, it’s clear that various levels of government relief directed toward property taxes and insurance was prophesized also, as the other programs directed towards labour,” said Kennedy by way of introduction. “There was some deferral of property-tax payments, depending on geography, and there was help for both these expenditures through the Canada emergency rent subsidy. But as these programs dwindle, we have to look at creative ways to control both property taxes and insurance expenses.”

According to Bishop, “the question is on everybody’s mind is ‘are my property assessments now going to start going back up?’ And the answer to that is it kind of depends on where you’re located.”

In order for property taxes to be distributed equitably, Bishop explained it’s important that assessments are kept up to date. “Normally, the ideal would be assessments updated annually to reflect current market value, and the valuation date that the municipality or the assessment authority is using.”

From an insurance perspective, Lakhani said owners are looking at valuations from a totally different lens. It’s more about how the current economic conditions are impacting property insurance, “and what you’ll notice is that all the hotel owners have seen escalating insurance costs. On a positive note, all hotel owners have seen a significant appreciation of the real-estate assets. However, insurance companies actually look at replacement value for re-building. So, the key elements that goes into coming up with your replacement value is going to be construction. And as we all know, and experienced, construction costs have risen significantly, both material as well as labour, and we’ve seen double-digit increases in our claims sector before replacement costs subsequently after the claim.”

The second factor she identified as impacting escalating premiums is “an incredible shrinkage in capacity in the Canadian insurance marketplace. What I mean by that is there’s been insurers that have exited, and re-insurers have exited the Canadian marketplace entirely, meaning there’s only a select few insurers left and these select few insurers are being very, very selective about which risks [they take on]. And there’s only been a handful of insurers that will even entertain a hotel account, largely because frequency and severity of claims have risen in the hospitality sector.”

We’ve seen inflationary increases, construction cost increases, reduced capacity, increase in claims costs, “so, this has been a perfect storm.”

Re-Thinking Human Capital

The next session titled, Recruitment, Retention, and Rethinking Hospitality Human Capital, featured Dario Guescini, director, WIL, Experiential Education & Global Mobility at George Brown College; Tracey Kalimeris, vice-president, Talent & Culture, North & Central America at Accor; William Loughran, president, Evolution Hospitality, Aimbridge Hospitality; and Philip Mondor, president and CEO of Tourism HR Canada.

Tourism HR Canada undertakes research specifically related to the labour scope of our industry. Mondor kicked off the discussion off with a high-level summary of where the industry is at right now in terms of labor supply versus labour demand.

“I’m always the bearer of bad news to start, but I think it’s a good place to begin,” he said. “If I take you back to the beginning of the pandemic, within the first 10 weeks, this industry lost 182,000 workers. A good portion of those were in the hotel sector, the hardest hit of our five industries. Today, we have just over 400,000 fewer workers than we normally would have at this time of year in pre-pandemic times. And just so that everyone is clear, even today, [using] data from two weeks ago, in fact, we currently have about 225,000 job vacancies. Those are jobs that are advertised and unfilled. So, you can see we’ve got some work to do.”

And while numbers are a key metric, Mondor re-inforced that it’s “not just a numbers game here. One of the other major concerns is the skills issue. The skills gap is a growing concern for us. Depending on the role, somewhere between 25 and 40 per cent of our workers don’t have the skills to do their job well. In other words, that’s impacting productivity. It’s also impacting things like retention. There is a mismatch, that mismatch has to be addressed, we are not optimizing our current workforce.”

The logical next step in terms of looking down on that talent pipeline, said moderator Joe Baker, then, is to reflect on the post-secondary educational systems specifically, and those programs that support the hospitality industry.

Guescini offered his insight in terms of the hospitality and tourism-related program enrollment trends.

“When it comes to enrollment trends, and we have seen the trend since 2012, we see a decrease in enrollment, specifically in domestic enrollment. If we look at the numbers from 2014, to today, we’ve seen a decline of almost 50 per cent nationwide, which is alarming.”

“We definitely weren’t prepared for this,” said Kalimeris about the labour shortage. “When I speak to my peers, who are based in the Middle East, they’re not experiencing the same labour challenges we are. But when you look here in our own backyard in Canada, I honestly cannot remember a time that has been more challenging. We’re not filling restaurants to maximum capacity, because we can’t service; we’re not optimizing room revenue because we don’t have enough people to serve the guests. I was on the phone the other day with one of our agents in Canada and they were telling me they’re going to have to start closing floors. That’s how bad it is.”

According to Loughran, hotels are also dealing with massive burnout. “People that have survived the last two years and worn different hats and have done the work of five people at one time, we’re asking them to do more now. We’re not staffing accordingly quite yet, because we can’t find the labour or don’t have it.”

He said the burnout factor ripples from leadership all the way down, “and leads to issues like shortcuts at work and injuries.”

He said hoteliers find themselves having to bring in entirely new people to the industry, train them and get them up to speed very quickly.

Check out Wednesday’s edition of Hospitality Headlines for coverage of CHIC’s afternoon sessions


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