By Nicole Di Tomasso

VANCOUVER — The Western Canadian Lodging Conference was held November 15 and 16 at The Westin Bayshore Vancouver. The live and virtual event provided an opportunity for lenders/investors, architects, designers, hospitality consultants and lawyers to gain a better perspective on the rapidly evolving hotel industry through interactive sessions and expert insights into investment activity and the potential within the Western Canadian market.

In Debt and Equity We Trust

Moderated by Aaron Bowler, partner at Borden Ladner Gervais LLP, this panel discussion featured Cameron Woof, assistant vice-president, Hotels & Syndication at CWB Franchise Finance; Nicole Nguyen, director with CBRE Hotels Valuation & Advisory Services; Jiri Rumlena, president of SilverBirch Hotels & Resorts; and Jeff Hyslop, senior vice-president of Asset Management at InnVest Hotels.

Although the industry is starting to emerge from the constraints of the COVID-19 pandemic, the consensus is there will be an adjustment period over the next 12 to 18 months. “We’re definitely moving into a favourable lending environment,” said Woof. “But the reality is, even though we expect RevPAR to increase over the next two to four years to reach 2019 levels, we still have 12 to 18 months of tough slog. When lenders are looking at that environment, they’re obviously going to be more conservative than owners who might be more optimistic.”

From a hotel-owner perspective, Rumlena said, “It really comes down to demonstrating to your lender what your strategy for the asset is, your ability to operate it and how your liquidity is going to evolve over the next 12 to 18 months to effectively service the loan. In many ways, it doesn’t feel that different. We were always thinking through that, but I think lenders want to see more of that today and make sure all of it is sorted out.”

Hyslop added, “Certainly, more communication and reporting is needed about what the plan is and what it looks like to work through the cash-flow challenges. Fundamentally, it comes down to [managing] relationships.”

Nguyen also noted, “At some point, the government programs are going to wrap up and people are going to have to make decisions about which assets stay, which assets they sell and how they re-structure their finances. Up until now, our industry has been [solely] focused on survival and managing the demand and people to get through.”

Looking forward to 2022 and 2023, labour is certainly a major challenge facing the industry. “When businesses started opening up, everyone was hiring, which caused immense pressure on our hotels. A lot of rooms were actually left out of order because we couldn’t service them, said Hyslop. “Things are better, but it’s still a slog on the hiring side at all levels, not just housekeeping. We’ve lost a lot of talent as an industry as people were forced to look at other opportunities.”

On the opportunity side, the panelists said hotels’ Average Daily Rate is expected to grow due to an uptick in demand for travel, and from an asset perspective, Hyslop said it’s cheaper to renovate an existing asset at a steep replacement discount than building something new. 

In closing, the panelists were cautiously optimistic about what’s to come in the hotel industry. Re-structuring finances, re-hiring and supply chain issues are only a few of the challenges that will need to be worked out over the next 12 to 18 months to ensure a return to normalcy, whatever that may look like. 

“If we can figure out ways to get through this and find light at the end of tunnel by communicating with our borrowers and industry professionals, then I think we have a good path forward,” said Woof.

Update from Susie Grynol and HAC

Over the course of the pandemic, Susie Grynol and her team at HAC have achieved significant advocacy wins for the tourism and hospitality industry, from extending government subsidy programs (CEWS and CERS) to introducing the new Tourism and Hospitality Recovery Program and the Hardest-Hit Businesses Program.

Now, Grynol and her team are shifting their focus to labour shortages across the industry. “Looking ahead, our big focus is going to be on the labour crisis. We need the federal and provincial governments’ attention on that to make sure we have enough workers because it will be the biggest barrier to our recovery.”

Additionally, Grynol said pivoting the narrative away from staying at home to encouraging travel is paramount. “We need to be allowed to operate, to get off the government’s programs and to start bookings again. We need to have a climate where travel is being encouraged again, and we’ll be having direct conversations with government to ensure that.”

And, in closing, Grynol addressed the association’s rising fees for hotel owners, brands and suppliers in their network. “We have so much work to do to build back, and we’re just starting that process. That’s specifically why we’re raising fees because we can help. We’re uniquely positioned with this government as a trusted advisor to help put the policies and programs in place that this industry needs to build back and build back quickly.”

Closing Keynote with Leonard Brody

The conference’s final keynote featured Leonard Brody, co-founder and executive chairman of Caravan, who spoke about historical re-set cycles and their impact on human behaviour, with the COVID-19 pandemic being one of those cycles today.

“If you take a look at the DNA of what occurred in Spanish Flu in 1919, you’ll see there’s incredible similarities in the patterning we’re going through now,” said Brody. “It’s important when thinking about these historical patterns that we’re living in to go back to the closest medical re-set of this scale and start to take some of lessons from it.”

Brody continued, “The best way to envision what we’ve been living through for the past 300 years is to think about someone consistently putting their finger on the re-set button of a computer, re-setting the way we operate and live our lives.”

He went on to explain four main causes of a re-set: financial crisis, war, technological change and medical. “We’re looking at a large enough planetary change across the globe, where it affects 30 to 35 per cent of the way we consume and the way we communicate. If that happens, we’re generally in a re-set moment.”

Generally, in these re-set moments, there are two stages that happen after: economic devaluation and economic growth. “Often, the economic growth cycle that proceeded it is actually smaller than the one that comes next. The key takeaway is that too many companies and people spend their time in this devaluation period. Even in portions of this conference, the vast majority of the conversations I heard were about these [economic devaluation] moments. But the question we should ask ourselves instead is, ‘what is this growth period going to look like?’”

With regard to changes in human behaviour, Brody points to three in particular: online consumption and communication, at-home or blended work environments and intensely valued live and in-person events.

“The modern-day office is going to look very different, and I think that’s good news for [the hospitality industry.] What you’re starting to see in larger urban centres is revenue sources captured just out lobbies as co-working spaces. And, if you look at where people are going to spend their dollars post-pandemic, it’s great news for [the industry] as well. It’s travel, lodging, bars – all of it.”

Brody wrapped up his presentation with an interesting note about leadership. He said that people walking into hospitality environments only care about five key things: bed, Wi-Fi, shower, service and food and beverage. “Most hotels today fail at 90 per cent of these things. Still, the fundamentals aren’t properly met.” 

Brody concluded by offering an interesting piece of advice. “Leadership is going to be so important moving forward. Traditionally, executives were measured by metrics. Today, leaders are people who have a strong theory of the world. At this scale, you need to over-promise and half deliver. If you’re being measured by your theory of the world, your half deliverance is going to be much better than everyone else, and you’ll be industry leading. Your promise and the execution should never meet.”


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