Hotel Online  Special Report

Lodging Market Impact of Hosting Olympic Winter Games; 
Will Salt Lake City Experience Apply
to Vancouver and Whistler?
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CANADIAN LODGING OUTLOOK
June 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: Jason McKay - HVS International - Vancouver

In February 2002, Salt Lake City, Utah, welcomed the world when it hosted the XIX Olympic Winter Games.  A roster of 78 events drew almost 2,400 athletes, 22,000 volunteers, 77 National Olympic Committees, and over 8,000 media representatives. Vancouver was just awarded the 2010 Winter Olympic Games in July of this year. What can Vancouver and Whistler area hoteliers expect when the world is at their doorstep?

The Winter Olympics are held over 16 days in February, every four years.  Hosting the Winter Olympics is good news for hotels in the host city when, under normal circumstances, operating performance can be moderate at best during the month of February (mind you Whistler does extremely well already in February). For Salt Lake City, hosting the XIX Winter Olympic Games was a much-needed stimulus to a lodging market that was in decline. But exactly how much of an impact do the Winter Olympics have on an area's lodging market, and for how long? 

Most host cities seem to experience a vacuum in activity just prior to and immediately following the 16 days of actual competition that make up the Winter Olympics. Salt Lake City was no different. In the late 1990s, operating performance, defined in terms of occupancy rates and average daily room rates (ADR), began to decline in Salt Lake City. This was a result of the tremendous amount of construction and improvements undertaken throughout the city to prepare for the Games. Some of the downtown streets and portions of Interstate Highways were entirely unusable for extended periods of time.

Occupancy and ADR declined 16% and 6% respectively in the month of January (one month prior to the February Olympics), bringing rooms revenue per available room (RevPAR) down 21% as compared to the same period in 2001.  This drop can be attributed to the traveler sentiment that it is better to stay away from a city that is about to host the Winter Olympics, given the flurry of activity involved in preparing the city. 
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Salt Lake City
Month
2001
Occupancy
2001
ADR
2002
Occupancy
2002
% Change
2002
ADR
2002 
% Change
January 56.7% $85.66 47.5% -16% $80.91 -6%
February 63.5% 85.16 84.2% 33% 165.76 95%
March 74.7% 88.45 55.9% -25% 81.92 -7%
April 56.5% 76.08 67.7% 20% 84.94 12%
May 55.6% 77.36 51.5% -7% 89.09 15%
June 60.9% 76.99 59.1% -3% 80.11 4%
July 61.8% 76.36 53.1% -14% 79.52 4%
August 65.1% 81.40 59.3% -9% 82.08 1%
September 52.1% 76.61 56.7% 9% 88.84 16%
October 43.8% 78.74 55.9% 27% 89.14 13%
November 39.5% 73.87 39.5% 0% 78.81 7%
December 41.6% 70.97 38.5% -7% 73.54 4%
Total 56.0% $78.97 55.7% -0.4% $89.56 13%
.
However, in the following month (the month of the Games), the overall occupancy rate and ADR increased by 33% and 95% respectively over the same period in 2001, which jumped RevPAR to $140.00 - a 158% increase as compared to February of the previous year! 

In March, occupancy fell 34% from its high during the Games, which is a 25% decline from the same period in 2001.  Again, the sudden drop year-over-year is indicative of the trademark vacuum of activity host cities experience before and after the 16 days of Olympic competition.  Average daily rates also dropped by 51% from the time the Games were on, which is a decline of 7% over the same period in the previous year. 

After March, the changes in occupancy and ADR are not as dramatic; however, they still provide some insight as to what future host cities can expect.

For the remainder of the year, occupancy returned to levels similar to those experienced before the Games, although there were some exceptions; in spring and fall, occupancy rates were 9% to 27% higher than in 2001. It should be noted, however, that comparing occupancy rates from the fall of 2002 to occupancy rates from the fall of 2001 isn't representative of normal market conditions because the effects of the terrorist attacks on September 11, 2001, skew the occupancy rates down for the fall of that year. 

Occupancy rates adjusted themselves as the year moved forward, making the real impact of hosting the Winter Olympics more evident. Average daily rates skyrocketed during the time the Games were on. From this high, ADR slowly eroded, but not as quickly as occupancy rates. Average daily rates maintained double digit growth (between 12% and 16%) in four of the nine months remaining in the year following the March lull, as compared to 2001. For the remaining five of the nine months, ADR still maintained growth, just not at a double digit pace. The prolonged buoyancy of ADR throughout the year helped keep RevPAR up year-over-year by 17% despite the rapid adjustment of occupancy to more normal levels.

If Salt Lake City is any indication of what the Vancouver and Whistler area hoteliers can expect, they should look for a dramatic swing in occupancy and ADR surrounding the Games, including unprecedented highs during the 16 days of actual competition.  Following the competition, occupancy will turn itself around quickly while ADR will continue to grow, which translates into the possibility of an inflated RevPAR for the year that the Games occur. By years end 2010, operations should be back to normal in Vancouver, with the prospect of future growth on everyone's mind.
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CANADIAN LODGING OUTLOOK
HVS INTERNATIONAL - CANADA
Month of June 2003
Month of 
June 2003
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 1,693 66.3% 68.7% $86.04 $86.26 $57.04 $59.23 0.8% -2.7%
Halifax, NS 2,077 85.5% 87.1% $138.84 $127.53 $118.71 $111.08 4.1% 2.2%
Montreal, QC 14,644 75.2% 80.4% $169.91 $170.73 $127.77 $137.27 -0.3% -6.7%
Quebec City, QC 3,804 73.1% 78.8% $152.33 $156.77 $111.35 $123.53 0.0% -7.2%
Quebec Area 3,381 60.1% 63.6% $97.55 $98.14 $58.63 $62.42 0.0% -5.4%
Toronto Downtown 11,418 54.7% 78.8% $149.08 $187.04 $81.55 $147.39 -4.5% -33.7%
Toronto North/East 6,582 49.0% 73.4% $109.96 $110.01 $53.88 $80.75 6.3% -29.1%
Toronto Airport/West 6,541 54.0% 68.5% $102.82 $113.03 $55.52 $77.43 -1.1% -22.0%
Ottawa, ON 8,270 71.6% 73.5% $128.82 $130.49 $92.24 $95.91 0.0% -2.6%
Ontario East 3,986 62.0% 68.4% $96.65 $96.20 $59.92 $65.80 0.1% -9.3%
Ontario Southwest 8,195 62.5% 66.9% $95.56 $96.75 $59.73 $64.73 0.4% -6.2%
Ontario North 5,095 64.3% 65.7% $96.90 $104.67 $62.31 $68.77 0.3% -1.8%
Niagara Falls,ON 7,049 63.2% 74.2% $112.89 $127.80 $71.35 $94.83 0.6% -14.4%
Ontario Central 7,875 60.2% 70.2% $98.75 $100.78 $59.45 $70.75 2.3% -12.2%
Winnipeg, MB 3,717 69.1% 70.9% $94.60 $95.18 $65.37 $67.48 0.0% -2.5%
Regina/Saskatoon, SK 3,863 62.5% 68.2% $87.93 $85.28 $54.96 $58.16 0.0% -8.3%
Calgary, AB 5,439 72.4% 81.1% $119.48 $135.19 $86.50 $109.64 0.0% -10.7%
Edmonton, AB 5,258 64.0% 80.2% $99.68 $93.99 $63.80 $75.38 1.1% -19.3%
Alberta Area 8,224 63.1% 68.2% $95.36 $102.95 $60.17 $70.21 1.7% -5.9%
Mountain Regions, AB 2,376 65.0% 74.5% $290.29 $283.87 $188.69 $211.48 0.0% -12.7%
Vancouver, BC 12,820 68.7% 75.4% $145.10 $158.12 $99.68 $119.22 0.0% -8.9%
British Columbia Area 7,648 49.9% 56.3% $101.25 $111.64 $50.52 $62.85 1.2% -10.3%
Victoria, BC 2,820 68.6% 70.3% $133.47 $148.28 $91.56 $104.24 0.0% -2.5%
Provinces
Alberta 21,266 65.9% 75.1% $124.77 $129.45 $82.22 $97.22 1.1% -11.4%
British Columbia 24,372 61.7% 67.7% $129.96 $141.33 $80.19 $95.68 0.6% -8.3%
Manitoba 4,103 68.5% 69.8% $92.91 $93.69 $63.64 $65.40 0.5% -1.3%
New Brunswick 2,970 66.7% 69.8% $103.34 $98.91 $68.93 $69.04 0.0% -4.4%
Newfoundland 1,521 78.9% 78.0% $121.01 $116.47 $95.48 $90.85 0.0% 1.1%
Nova Scotia 3,770 76.9% 79.1% $118.34 $111.85 $91.00 $88.47 1.7% -1.1%
Northwest Territories INS INS INS INS INS INS INS INS INS
Ontario 64,049 60.0% 72.0% $113.24 $126.83 $67.94 $91.32 0.3% -16.5%
Prince Edward Island 889 70.3% 62.2% $119.42 $107.88 $83.95 $67.10 0.0% 13.0%
Quebec 22,822 71.9% 76.9% $156.47 $157.64 $112.50 $121.23 -0.1% -6.6%
Saskatchewan 5,062 60.7% 63.5% $82.52 $80.03 $50.09 $50.82 0.0% -4.5%
Yukon Territory 579 66.4% 60.4% $97.31 $94.39 $64.61 $57.01 0.0% 10.0%
Canada 151,403 61.0% 67.7% $111.63 $116.04 $68.09 $78.56 0.4% -9.6%
© Smith Travel Research, 2003. Reproduction or quotation in whole or in part without permission is forbidden.
*INS - Insufficient Data

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

June 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 1,693 52.0% 54.2% $78.14 $77.23 $40.63 $41.86 0.3% -3.9%
Halifax, NS 2,077 66.7% 66.3% $117.53 $110.95 $78.39 $73.56 4.7% 5.3%
Montreal, QC 14,644 60.8% 63.5% $136.11 $138.44 $82.75 $87.91 0.1% -4.1%
Quebec City, QC 3,804 58.9% 61.5% $122.19 $123.01 $71.97 $75.65 0.0% -4.3%
Quebec Area 3,381 52.1% 51.5% $87.60 $84.97 $45.64 $43.76 0.0% 1.2%
Toronto Downtown 11,418 52.1% 64.2% $141.30 $162.58 $73.62 $104.38 -1.5% -20.1%
Toronto North/East 6,582 46.4% 57.3% $105.75 $108.86 $49.07 $62.38 6.7% -13.7%
Toronto Airport/West 6,541 59.9% 66.0% $106.57 $113.10 $63.84 $74.65 -1.6% -10.7%
Ottawa, ON 8,270 62.3% 62.2% $126.63 $127.10 $78.89 $79.06 0.9% 1.0%
Ontario East 3,986 49.3% 52.1% $88.42 $87.58 $43.59 $45.63 0.1% -5.2%
Ontario Southwest 8,195 56.8% 58.2% $93.00 $94.41 $52.82 $54.95 0.4% -1.9%
Ontario North 5,095 53.6% 53.0% $88.28 $88.62 $47.32 $46.97 0.3% 1.5%
Niagara Falls, ON 7,049 45.8% 50.3% $98.31 $104.67 $45.03 $52.65 0.2% -8.7%
Ontario Central 7,875 54.1% 58.4% $97.50 $97.39 $52.75 $56.88 2.3% -5.3%
Winnipeg, MB 3,717 58.5% 61.5% $91.90 $90.64 $53.76 $55.74 1.6% -3.2%
Regina/Saskatoon, SK 3,863 59.0% 60.6% $86.63 $83.94 $51.11 $50.87 0.0% -2.5%
Calgary, AB 5,439 58.4% 61.2% $113.11 $117.16 $66.06 $71.70 0.0% -4.7%
Edmonton, AB 5,258 62.0% 75.7% $96.60 $90.41 $59.89 $68.44 1.1% -17.2%
Alberta Area 8,224 56.5% 59.4% $89.33 $90.33 $50.47 $53.66 1.8% -3.1%
MountainRegions, AB 2,376 57.9% 62.9% $194.12 $185.07 $112.40 $116.41 0.0% -7.9%
Vancouver, BC 12,820 57.0% 59.9% $122.33 $127.12 $69.73 $76.14 0.0% -4.8%
British Columbia Area 7,648 50.9% 53.1% $146.65 $146.38 $74.64 $77.73 1.2% -2.9%
Victoria, BC 2,820 57.1% 58.8% $107.78 $109.28 $61.54 $64.26 -0.2% -3.2%
Provinces
Alberta 21,266 58.5% 64.3% $108.80 $107.20 $63.65 $68.93 1.1% -7.9%
British Columbia 24,372 54.8% 57.4% $124.57 $127.20 $68.26 $73.01 0.6% -4.0%
Manitoba 4,103 58.1% 61.1% $90.65 $89.28 $52.67 $54.55 1.6% -3.4%
New Brunswick 2,970 57.1% 57.2% $89.93 $89.09 $51.35 $50.96 0.3% 0.2%
Newfoundland 1,521 59.3% 62.0% $107.15 $104.26 $63.54 $64.64 0.0% -4.3%
Nova Scotia 3,770 60.1% 61.2% $102.38 $98.27 $61.53 $60.14 1.5% -0.2%
Northwest Territories INS INS INS INS INS INS INS INS INS
Ontario 64,049 53.7% 59.2% $109.32 $116.75 $58.70 $69.12 0.7% -8.6%
Prince Edward Island 889 42.2% 41.3% $84.63 $80.96 $35.71 $33.44 0.0% 2.3%
Quebec 22,822 59.0% 60.8% $126.78 $128.29 $74.80 $78.00 0.0% -2.9%
Saskatchewan 5,062 54.7% 55.7% $81.33 $78.80 $44.49 $43.89 0.0% -1.8%
Yukon Territory 579 41.3% 38.8% $80.80 $78.59 $33.37 $30.49 0.0% 6.3%
Canada 151,403 52.8% 56.2% $104.58 $105.70 $55.22 $59.40 0.6% -5.5%
© 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
[email protected]
www.hvsinternational.com

Also See Year-to-date Occupancy through April is 50.4% for all of Canada / Canadian Lodging Outlook - April 2003 YTD / June 2003
SARS and Its Impact on Tourism in Toronto / Canadian Lodging Outlook - March 2003 YTD / May 2003
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
Hotel Insurance Premiums on the Rise? / Canadian Lodging Outlook / May 2002 
Hotel Development Cost Can Determine Feasibility / Canadian Lodging Outlook / May 2002 
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
So How Bad Was September for Canadian Hotels.. Pretty Bad! / The Canadian Lodging Outlook / September 2001 
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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