Toronto hotels post best June ever


At the start of the pandemic, Toronto was one of the hardest hit cities in Canada, but things are finally turning around and hotel performance is reaching new heights. In June, measures not only hit pandemic-era highs, but also reached the strongest June on record. Even on an inflation-adjusted basis, the average daily rate and revenue per available room exceeded 2019 levels. Additionally, occupancy, which has lagged the recovery so far, was in line with the highest occupancy rate ever achieved in June.

There are several reasons behind the success. All in all, it was the perfect mix of a relatively low number of hospitalizations, pent-up demand for travel, a large pile of cash accumulated at the start of the pandemic and a long list of reasons to visit the city. Demand for transient recreation is still leading the recovery, hitting between 90% and 100% of 2019 levels since April. The domestic market is the main driver, with Canadians making their first trips close to home and enjoying urban outings. But the biggest difference in June was the return of demand sources that had been lagging.

June was a busy month for conferences and events, which greatly benefited downtown Toronto. Most notably, Collision – said to be the fastest growing technology conference in North America – was held at the Enercare Center from June 20-23, and more than 35,000 people attended. This is a 40% increase from the last time the event was held in person in the city in 2019. The previous week, June 13-15, the Prospectors & Developers Association of Canada held its annual mineral exploration and mining convention, attracting over 17,000 attendees at the Metro Toronto Convention Center in Toronto. The event is usually held in March but was pushed back to June as omicron wave restrictions had just been lifted. June was also Pride Month, with several events throughout the month and culminating with its busiest weekend, Pride Festival Weekend June 24-26.

Although not reaching pre-pandemic levels, business travel has also started to rebound. On June 12, the Biden administration lifted its requirement that international travelers test negative for COVID-19 within a day before boarding a flight to the United States. This likely had a positive effect on inbound international travel to the United States and also helped international business travel to Canada by reducing the hassle of returning home. Meanwhile, entering Canada was simplified for most of June as random entry testing was suspended from June 11, but was reinstated on July 19.

Hotels near Toronto Pearson International Airport and west of downtown, however, were the best performers in June, and again there were multiple drivers. According to Statistics Canada, inbound international air travel to Canada’s airports approached pre-pandemic levels in June. This is a sharp increase from May, when volume was only around 47% of May 2019 levels. Meanwhile, the number of Canadians returning from abroad was 15 times higher until June 2021. This surge in demand has overwhelmed airports, and particularly in Toronto, leading to flight cancellations, delayed flights and lost luggage, which has created demand for hoteliers. nearby. Additionally, given the busy schedule of events downtown, compression was created on the busiest nights, and hotels outside of downtown benefited. This demand was even felt west of the city center near the airport, accommodating the overflow of customers who could not find accommodation or who did not want to pay the higher price for stay downtown.

The pandemic has also suppressed the number of hotel rooms available, with approximately 1,600 fewer rooms available each night compared to the end of 2019. There remain approximately 900 rooms temporarily closed due to the pandemic; the balance shows a negative net position between rooms definitively destocked and new inventories brought into service.

Another relatively important factor is that there are fewer short-term rentals available. According to data from AirDNA, the number of available units is down 40% from pre-pandemic levels. There are also a variety of factors behind this reduction, including new regulations implemented in 2020 stating that a unit must be registered and must be the owner’s primary residence, and the fact that many owners were looking for long-term renters when travel demand was low in the early days of the pandemic.

The reduction in hotel inventories and short-term rentals removed supply pressure on the metrics. But in time that will change, with hotels reopening and a development pipeline at a 10-year high of more than 2,000 rooms under construction and nearly 1,100 in final planning. But for now, the reduction is helping the recovery. Looking ahead, the current reduction in room count provides insight into how the market will perform if more hotels are redeveloped into residences, such as the proposed 1,590-room Chelsea Hotel Toronto redevelopment.

The outlook for the city is positive and the sector is proving it can reach new heights. Preliminary data for July shows a slight month-over-month contraction in operating performance slightly more pronounced than the typical seasonal pattern, but the metrics remain well above 2019. This is likely due to a very strong rather than a true slowdown in the recovery, and we expect August metrics to remain strong, driven by transient leisure demand. Other events that were canceled earlier in the pandemic will take place over the remainder of 2022 and 2023, keeping typical patterns slightly askew over the coming months. More importantly, this demand will keep the city busy and provide an excellent base of business for hoteliers to build on.

Source link


About Author

Comments are closed.