As Canada and the world grapples with the impacts of COVID-19, the Canadian hotel industry has recorded steep year-over-year declines across the three key performance metrics.

According to data from STR, the industry reported an 81.2-per-cent drop in occupancy to 12 per cent, a 33.8-per-cent decrease in Average Daily Rate (ADR) to $101.34 and an 87.6-per-cent decrease in Revenue Per Available Room (RevPAR) to $12.17 for the week ending April 11, 2020. In a webinar highlighting the week’s results, Jan Freitag, STR’s SVP of Lodging Insights, noted that these results “will likely not get much worse.”

“What we’re seeing now is this evening out of the RevPAR per cent change — call it a mid-80s to low 90s per cent change — that is likely what we will continue to see going forward,” Freitag explained. He also shared data indicating that 14.5 per cent of Canadian rooms were closed as of April 16 (approximately 66,000 out of 450,000 rooms). “We fully expect a large majority of these rooms to open up again,” he stressed. “If [properties] do not make it through, there will likely be ownership changes, but I do not foresee a large [number of properties] actually closing permanently.”

The industry has been reporting double-digit declines in occupancy since the week of March 8 to 14 and occupancy below 15 per cent since the week ending March 28.

Quebec has consistently experienced the steepest declines in both occupancy and RevPAR since early March. For the week ending April 11, RevPAR for the province fell 94.6 per cent to $6.63, while occupancy dropped 91.1 per cent to 6.4 per cent.

Occupancy for all major Canadian markets had dipped below 17 per cent by the week of April 5 to 11, with RevPAR declines exceeding 85 per cent. Vancouver and Ottawa were the only major markets to report double-digit occupancy for the week, with occupancies of 16.6 per cent and 11.5 per cent respectively. Much like the province of Quebec, Montreal has been hardest hit by the pandemic, Montreal experienced the most significant decline in both RevPAR and occupancy, which fell 94.6 per cent to $6.63 and 91.1 per cent to 6.4 per cent, respectively. RevPAR declines in Toronto were almost as steep, falling 94.1 per cent, year over year.

“The Canadian economy is taking a stark hit, not just the hotel industry,” Freitag noted. Sharing Statistics Canada data indicating that more than one-million jobs were lost in March, he added, “Obviously that has huge implications for the recovery, because somebody who doesn’t have a job, they will prioritize their leisure spend — if they have any leisure spend — very differently.”
Among the hotel tiers, high-end hotels have been the hardest hit during this crisis. Luxury and upper-upscale hotels have seen single-digit occupancies, as well as RevPAR declines of more than 90 per cent, for weeks. By comparison, midscale hotels — the best- performing class in the set (economy is not tracked) — saw RevPAR decline 76.3 per cent for the week ending April 11 and has been maintaining double-digit occupancy.

International Perspective
By comparison, occupancy declines in the U.S. have not been quite as steep — though still substantial — due largely to the fact that not all regions have taken strong measures to slow the spread of the virus. For example, states such as Alabama and Mississippi do not have shelter-in-place orders in place and are among the highest-performing states in terms of hotel occupancy (25.8 per cent and 25.5 per cent respectively).

For the week ending April 11, the U.S. hotel industry saw a year-over-year decline in occupancy of 69.8 per cent to 21 per cent. ADR fell 45.6 per cent to US$74.18 and RevPAR decreased 83.6-per-cent to US$15.61.

“Several weeks of data also point to occupancy in the 20-per-cent range to be the low point and economy hotels holding at a higher occupancy level is the pattern right now,” said Freitag.

Class performance for U.S. hotels looks very similar to that in Canada. Luxury and upper-upscale have seen RevPAR fall by more than 90 per cent and occupancies of just under nine per cent. As you move down the scale, the per-cent change decreases and occupancy increases, with the economy tier recording a 60.5-per-cent drop in RevPAR and occupancy of 33.6 per cent for the week ending April 11.
Extended-stay properties have also maintained higher occupancy levels — particularly in the lower end of the segment — with 39-per-cent occupancy for the week ending April 11, but 51-per-cent occupancy in “lower-end” extended-stay hotels.

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