Hotel Online  Special Report

SARS and Its Impact
on Tourism in Toronto
.
CANADIAN LODGING OUTLOOK
March 2003 Year-to-Date

The Canadian Lodging Outlook is a joint monthly publication 
of Smith Travel Research and HVS International, 
Vancouver and Toronto, Canada

 
By: Monique Rosszell, HVS International - Toronto

As all the world is aware, SARS has delivered a crippling blow to Toronto's economy, not unlike what New York City experienced with 9/11, or what Britain experienced with Mad Cow disease.

The immediate effect has been that over one-third of the 95,000 workers in the tourism industry in Toronto have been laid off, with many more working only part-time. Smith Travel Research has reported RevPAR results for downtown Toronto, compared to last year: for the week ending May 3, a decline of 71.5% for the week ending April 26, a decline of 56.3%; for the week ending April 19 (including Easter), a decline of 54.2%; for the week ending April 12, a decline of 40.0%; and for the week ending April 5, a decline of 15.4%. This translates into hotel occupancy rates in Toronto in the 30% to 40% range, instead of the seasonal 70% range. 

At least five major citywide conventions have been cancelled, with a loss of over 20,000 attendees, not to mention the vast amount of individual-hotel convention business that has been cancelled. Other SARS casualties include over 800 bus tours, music concerts, corporate travel, and school field trips; the list goes on and on. 

Downtown hotels have experienced last-minute group, leisure, and corporate cancellations valued in the hundreds of thousands of dollars. Given that tourism is among the top five sources of economic activity in all provinces, and is responsible for one fifth of the trillion-dollar Canadian economy, the repercussions are obviously quite serious. 

Ontario accounts for 40% of Canada's GDP, and Toronto 20% alone.

This could cost the Canadian economy up to $2.1-billion dollars in lost growth, according to Toronto Dominion Bank Financial Group. The Conference Board of Canada has estimated that the "outbreak will shave nearly $1-billion off of Toronto's real GDP in 2003. In a $200 billion economy, the impact represents half a percentage point on real GDP growth, so our outlook for the Toronto economy has been revised down from 3.8% to 3.3% this year. The SARS outbreak will have a heavy impact on the tourism, transportation, and retail trade sectors," said Mario Lefebvre of the Conference Board of Canada. The expected impact of SARS on tourism alone - excluding airport traffic - is estimated to be a loss of $350-million this year, a nine-percent decrease. Reduced accounts for an additional loss of $220 million, and non-tourism related retail sales will be reduced by $380-million.

Where does this leave the tourism market in Toronto? In need of massive financial aid! The three governments plan to spend $25-million on an economic-revival strategy for Toronto, mostly to promote the city to companies and potential tourists. At risk is the almost $5-billion that the 16.3-million visitors to Toronto spent in 2001, the latest year on which Statistics Canada has data. This advertising and marketing blitz will use television, radio, and newspaper ads to target not only U.S. border cities and states, but also "tourism influencers," organizations that put together tours and business conventions travel writers and business travellers.

The provincial government has also committed itself to an additional $118- million SARS Recovery package. A two-year tourism recovery plan is being undertaken to rebuild global confidence in Toronto and Ontario as world-class travel destinations. This package includes $66.8- million to rebuild global confidence in Toronto, $9-million for event marketing, and an additional $8-million for a special event to promote Toronto to the world.

Also included in the package are tax exemptions on Toronto accommodations and event admissions from May 1 to September 30, 2003.

Toronto has been trying to woo back tourists in a big way. The airlines have jumped on board to help promote Toronto, offering greatly reduced fares from Canadian and U.S. cities. Jetsgo is offering 1,000 free tickets to Toronto each weekend until Victoria Day. Many hotel chains are offering never-before-seen promotions on hotel rooms, food and
beverage, and theatre tickets. Gas stations have even been slashing their prices to encourage tourism.

Rod Seiling, president of the Greater Toronto Hotel Association, believes it will take Toronto two years to get back on track. Despite SARS and other issues, such as a weaker-than-expected U.S. economy, and the fallout from the war with Iraq, the hotel industry will make it through, and hopefully come out for the better. Maybe the long-awaited legislated hotel roomnight tax, as exists in many other Canadian cities, will need to be more seriously considered if Toronto is to reverse this damage and be able to financially sustain a permanent, much-needed international marketing program.
 

CANADIAN LODGING OUTLOOK
HVS INTERNATIONAL - CANADA
March 2003 Year-to-Date

March 2003
Year to Date
Number
of Rooms
Occupancy Rate 2003
Occupancy Rate 2002
Average Room Rate 2003
Average Room Rate 2002
RevPAR 2003
RevPAR 2002
Room Supply % Change
Room Demand % Change
Nova Scotia Area 1,457 48.4% 47.1% $74.46 $72.94 $36.04 $34.35 0.0% 2.8%
Halifax, NS 2,077 57.8% 54.7% $105.48 $98.81 $60.97 $54.05 5.0% 10.8%
Montreal, QC 14,698 55.5% 54.8% $129.11 $127.70 $71.66 $69.98 0.3% 1.5%
Quebec City, QC 3,720 54.7% 53.9% $112.07 $108.05 $61.30 $58.24 0.0% 1.5%
Quebec Area 3,347 48.3% 46.3% $84.65 $80.29 $40.89 $37.17 0.0% 4.2%
Toronto Downtown 11,441 57.9% 55.6% $141.65 $143.53 $82.02 $79.80 0.0% 4.1%
Toronto North/East 6,468 48.4% 49.4% $108.39 $109.08 $52.46 $53.89 7.1% 5.0%
Toronto Airport/West 6,280 67.8% 63.7% $111.16 $112.98 $75.37 $71.97 -2.1% 4.2%
Ottawa, ON 7,868 58.1% 55.1% $125.24 $123.42 $72.76 $68.00 1.7% 7.2%
Ontario East 3,848 45.9% 45.1% $85.24 $82.30 $39.13 $37.12 0.1% 1.8%
Ontario Southwest 7,639 55.1% 52.8% $94.31 $92.99 $51.96 $49.10 0.3% 4.7%
Ontario North 4,835 50.4% 48.0% $85.26 $83.71 $42.97 $40.18 0.3% 5.3%
Niagara Falls, ON 6,021 40.0% 39.1% $89.71 $93.52 $35.88 $36.57 0.0% 2.3%
Ontario Central 7,758 52.5% 52.5% $97.25 $95.76 $51.06 $50.27 2.2% 2.3%
Winnipeg, MB 3,550 51.4% 56.3% $89.10 $87.97 $45.80 $49.53 2.7% -6.3%
Regina/Saskatoon, SK 3,581 57.8% 56.7% $87.81 $84.02 $50.75 $47.64 0.0% 1.8%
Calgary, AB 5,537 52.8% 52.4% $110.96 $111.18 $58.59 $58.26 0.0% 0.8%
Edmonton, AB 4,829 58.5% 69.6% $95.73 $89.66 $56.00 $62.40 1.1% -15.0%
Alberta Area 7,772 54.8% 57.2% $87.86 $86.48 $48.15 $49.47 1.8% -2.6%
Mountain Regions, AB  2,326 55.8% 59.0% $172.85 $158.72 $96.45 $93.64 40.0% -5.3%
Vancouver, BC 12,331 50.8% 50.9% $109.31 $108.28 $55.53 $55.11 0.0% 0.0%
British Columbia Area 6,757 53.6% 53.9% $186.33 $183.68 $99.87 $99.00 1.1% 0.7%
Victoria, BC 2,625 48.2% 49.5% $89.76 $87.41 $43.26 $43.27 -0.4% -3.1%
Provinces . . . . . . . . .
Alberta 20,433 55.3% 59.2% $105.40 $101.02 $58.29 $59.80 1.1% -5.5%
British Columbia 23,019 51.1% 51.6% $128.28 $126.96 $65.55 $65.51 0.6% -0.3%
Manitoba 3,813 51.3% 56.8% $88.86 $86.77 $45.59 $49.29 2.3% -7.6%
New Brunswick 2,697 53.2% 50.5% $83.40 $84.57 $44.37 $42.71 0.4% 5.8%
Newfoundland 1,521 50.7% 53.4% $99.10 $96.08 $50.24 $51.31 0.0% -5.1%
Nova Scotia 3,534 53.9% 51.7% $93.83 $89.46 $50.57 $46.25 1.4% 5.6%
Northwest Territories INS INS INS INS INS INS INS INS INS
Ontario 61,196 53.9% 52.4% $110.37 $110.77 $59.49 $58.04 0.9% 3.7%
Prince Edward Island 889 34.0% 32.4% $62.88 $63.05 $21.38 $20.43 0.0% 5.0%
Quebec 22,758 54.1% 52.8% $119.85 $117.64 $64.84 $62.11 0.2% 2.6%
Saskatchewan 4,957 52.2% 51.4% $82.35 $78.91 $42.99 $40.56 0.0% 1.4%
Yukon Territory 274 INS INS INS INS INS INS INS INS
Canada 145,091 50.4% 50.9% $106.07 $104.48 $53.46 $53.18 0.7% -0.4%
© Smith Travel Research, 2003. Reproduction or quotation in whole or in part without permission is forbidden. *INS - Insufficient Data


Contact:
Selina Lai
HVS International – Canada
2120 Queen St. East, Suite 202
Toronto, ON M42 1E2
(416) 686-2260, ext 21
(416) 686-2264 FAX
slai@hvsinternational.com
www.hvsinternational.com

Also See Hotel Values in Europe - Current Trends / Canadian Lodging Outlook - December 2002 Year-to-Date / Feb 2003
2002 Canadian Hotel Transaction Survey / Canadian Lodging Outlook / Feb 2003
Performance Clauses Essential In Hotel Management Contract / Stephen Rushmore / Canadian Lodging Outlook / Dec 2002
Separating the Hotel Looker From the Hotel Buyer / Stephen Rushmore / Canadian Lodging Outlook / Sept 2002
Making The Ideal Hotel Investment / Stephen Rushmore / Canadian Lodging Outlook / Aug 2002
Reporting In at Six Months..../ Canadian Lodging Outlook / July 2002
The Global Approach To Hotel Valuations / Canadian Lodging Outlook / June 2002
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Hotel Internet Distribution Channels / January 2002 Month-to-Date Results / Canadian Lodging Outlook / April 2002 
2001 Was a Great Year If You Were in Edmonton! / December 2001 Year-to-Date Results / Canadian Lodging Outlook / Feb 2002 
2001 Canadian Hotel Sales / Canadian Lodging Outlook / Jan 2002 
The Effect on Capitalization Rates and Discount Factors After September 11 / Canadian Lodging Outlook / Dec 2001 
So How Bad Was September for Canadian Hotels.. Pretty Bad! / Nov 2001
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Have Hotel Values in Canada Declined Since September 11th? You Bet They Have / The Canadian Lodging Outlook / August 2001 
The Popularity of Boutique Hotels / The Canadian Lodging Outlook / July 2001 
Rising Energy Costs Cause Concern in the Lodging Industry / The Canadian Lodging Outlook / June 2001 
Niagara Falls: With Supply Comes Demand / The Canadian Lodging Outlook / May 2001 
Does Supply Generate Demand? / The Canadian Lodging Outlook / May 2001 
Optimism With a Hint of Caution, As Analysts Predict a Softer Year for the Canadian Hotel Industry / Mar 2001 
Limited-Service Growth in Canada - Where’s it Going? / The Canadian Lodging Outlook / January 2001 
HVS Canada in Review - Year End 2000 / The Canadian Lodging Outlook / March 2001 
Canadian Lodging Outlook / May 2000 Year to Date Statistics / HVS International - Canada / July 2000 
The Rule of Thumb Method...Does It Still Hold Weight? / Elaine Sahlins - HVS / Oct 2000
What’s Hot and What’s Not in Western Canadian Hotel Markets / Mar 2000


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