Monday, February 22, 2010

2009 Hotel Performance Review

For many in the North American tourism industry, the end of 2009 could not have come fast enough. The perfect storm crested over the entire industry with everything from at par currency, sluggish economy, poor weather and new passport requirements conspiring to slow the industry.

For me, status quo should be taken to be as good as growth and while I'm never happy to see negative performance, I have to say we weathered the storm better than many travel regions. It was a year where I did not compare our performance so much to other years but rather to other communities.

My last post focused on the remarkable resilience our U.S. markets showed last summer. As for our hotel performance, a year end dip of 3.2% in occupancy rates, told a story of people staying closer to home or looking for accommodation deals. However, its important that we look at those performance numbers in context. With the provincial average of -4.4% and national occupancy rates down 5.1% we still out performed many other jurisdictions. In fact, we have still retained an overall occupancy rate of 65.4%, higher than many other Northern Ontario communities. With respect to revenue per available room, Thunder Bay dipped 4.4% to $63.18 while nationally, the REVPAR rate dipped 12.3% to 72.80.

Apart from these declines, however, bright spots were noted. Apart from out performing many other markets, some properties reported some strong months, due in part to a combination of touring markets, conferences and sport travel. Some properties also re-invested in capital room upgrades - a positive sign during tough times that sends a message of long term optimism. This investment recognizes that good quality and value is also easier to sell in the long term.

Our corporate tourism markets are important to our economy and perhaps the largest single contributor to the dip was the health of the North American corporate economy. As companies contracted their spending, they sent less delegates to conventions and meetings. This accounts for the majority of the declines. However, given the performance of many other hotel markets, we have nothing to be ashamed of and we held our own nicely.

For 2010, the industry outlook looks slightly rosier although I am taking a more conservative approach to predicting performance to say we will hold the course. Corporate bookings appear to be on the increase and local advancements in the health sciences and mining industries are certain to grow corporate travel to the city. The Ring of Fire mineral exploration activity north of the city will have a significant medium to long term impact on our corporate travel markets as Thunder Bay plays a gateway role for the industry in terms of support services.

I think the industry deserves a round of applause for weathering 2009, and through it all, still making investments in capital and quality.

For 2010, it will take the entire tourism industry to keep working towards our goal to raise Thunder Bay's profile as one of North America's best outdoor cities for visiting, sports and work and a destination for unconventional convention experiences. I believe we're all up to the challenge.

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