COVID-19 has devastated the hotel industry, and we are seeing lower occupancy rates, RevPAR rates (Revenue Per Available Room), and ADRs (Average Daily Rate) than ever before. But what does this mean for the Alberta hotel industry? How long will it take to bounce back?
STR, a firm that benchmarks and analyzes the global hospitality sector, recently held an exclusive webinar for Alberta hotels to give them insight into the current situation, how they recovered from previous major downturns, and a forecast for the Canadian hotel sector.
The Situation During COVID-19
- Canada hit its lowest average occupancy rate (10.3%) in the history of hotel performance benchmarking in early April.
- Since then, we have started on the road to recovery. The week ending June 6, Canada’s average occupancy rate was 22.2%.
- The same week, Alberta’s occupancy rate was 21.0%, just below the national average. Occupancy varied greatly according to region, ranging from 13.4% in Red Deer to 53.7% in Fort McMurray (largely because of the recent flooding).
- Generally, during this COVID-19 pandemic, the higher the class of hotel, the lower occupancy they have.
RevPAR (Revenue Per Available Room)
- RevPAR was down the week ending June 6 by 82.9% compared to the same week last year.
- Alberta was faring a little better by that week, with provincial RevPAR only down by 77.3%.
Looking at the Last Two Major Downturns (9/11 and Lehman Bros. Bankruptcy )
- ADR rates in the US took twice as long to recover from both events as it did to hit rock bottom:
- After 9/11: It took 12 months for the ADR to crash to its lowest point, and 24 months to recover to the same level as before.
- After Lehmann Bros.: It took 19 months for ADR to hit rock bottom, and 37 months to recover.
- In Canada, ADR recovery after the 2008-09 crisis took even longer. It took rates about a year to fall to the low point of about $126, and four more years for rates to get back to the previous peak of almost $133.
- Alberta fared better than average, with the same amount of time required for recovery as it took to hit bottom.
Canadian Market Forecast
- Occupancy rates are not expected to rise much in 2020 since travel is still being discouraged, and fall/winter is when hotels generally enter a lower season.
- The average occupancy rate in Canada is not expected to rise above 30% until 2021.
- We can take comfort knowing that China, where the virus started, now has a 45.6% occupancy rate, and it continues to rise. The US is close behind at 39.3%.
Keep On Top of the Latest Stats
- STR offers hotels a free monthly Hotel Survey report, which allows hotels to compare their performance to that of the local market and submarket. Hoteliers can use this report to help with revenue management and marketing decisions, and will be especially helpful during the coming recovery.
- Your hotel data remains confidential and will not be shared with anyone. It is used only in aggregate form (averaged together with all other participating hotels) to provide valuable information to the AHLA and local Destination Marketing Organizations so they can advocate for hotel-friendly legislation and plan their marketing efforts to boost local tourism.
- Sign up for the free monthly Hotel Survey