‘Pretty dismal’: Alberta hotels still reeling from downturn, building binge

‘Pretty dismal’: Alberta hotels still reeling from downturn, building binge

Garrett Turta, general manager of the Fairmont Hotel Macdonald, poses for a photo on the patio in Edmonton on May 11, 2017.
Garrett Turta, general manager of the Fairmont Hotel Macdonald, poses for a photo on the patio in Edmonton, Alta. on Thursday, May 11, 2017. He said the hotel has seen some bright spots but continues to feel the pinch from the oil and gas downturn. IAN KUCERAK /POSTMEDIA

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Vacant rooms. Falling rates. And more hotels yet to be built.

That’s the story in Alberta’s hotel industry, which continues to face a battering from a downturn in the oil and gas industry, a building binge that began when the province was booming and the prospect of further market disruptions from room-sharing services like Airbnb.

“We’re in kind of that perfect storm,” said Dave Kaiser, president and CEO of the Alberta Hotel and Lodging Association.

“We’re really in a tough spot still, except for the resort areas (of Jasper and Banff). But pretty much everywhere else our (occupancy) numbers are frighteningly low.”

Like the oil industry, Alberta hotels are facing a supply glut. High oil prices and demand for crew and corporate accommodation led to a building boom in Edmonton and around the province. While demand in the accommodation sector is improving, Kaiser said the abundance of new rooms is stifling the recovery.

“In 2017 we’re projected to have some positive demand for the first time in a couple years,” he said. “The bad news is our supply growth is still exceeding demand in almost every market.”

New occupancy data from CBRE Hotels tell the tale. In February, the most recent month for which numbers are available, 56.7 per cent of Edmonton hotel rooms were occupied, compared to 68.1 per cent during boom times in 2014.

Room at the inn: Alberta hotels still struggling in downturn
http://infogr.am/alberta_hotel_occupancy_through_the_downturn

Occupancy rates and average daily room rates are based on monthly averages of all reporting hotels, motels and motor hotels in each designated region. SOURCE: Alberta Tourism Market Monitor, CBRE Hotels. *Other Alberta communities include Lethbridge, Red Deer, other cities and towns

Lethbridge, Red Deer and other smaller communities saw 42 per cent occupancy that month, down nearly 25 per cent from three years ago as oil and gas activity collapsed with commodity prices.

Karen Naylor, who manages two Edmonton-area hotels part-owned by her family, said in an email that the downturn has forced smaller operations to slash expenses without affecting service.

“Part of our strategy is that family members pitch in to help our staff as economic challenges arise,” said Naylor, who is general manager of Super 8 Edmonton South and Ramada Sherwood Park. “Between the economic downturn, the carbon tax and the minimum wage increases, it has definitely been a challenging year and first quarter.”

Hotels in downtown Edmonton are seeing some bright spots, said Garrett Turta, general manager of the Fairmont Hotel Macdonald.

The historic hotel is seeing some spillover from Rogers Place crowds, renewed demand from ultra-high end travellers, and a post-fire bump in Fort McMurray residents weekending at the hotel.

“Overall, it’s still a tough economy, a tougher area, but we’re still able to grow,” he said.

Resorts like Jasper and Banff are also seeing steady occupancy rates and expect to see a bump from Canada 150 celebrations, Kaiser said.

Even if demand for hotel rooms catches up with supply, there’s Airbnb. The prospect of more room shares on offer in Calgary and Edmonton is another worry for traditional hoteliers, Kaiser said.

“At this point it hasn’t taken a big bite out of our industry, but certainly if the growth continues at current rates and we start to see the kind of inventory that we have in Toronto or Vancouver, it will have a huge impact on us,” he said.

Edmonton Journal

[email protected] 

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Samantha

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