

Hotels – 2022 into 2023
At all the 2022 fall lodging conferences including Ascend in Alberta, Gather Again in Saskatchewan and the Western Canadian Lodging Conference all were not cautiously upbeat but enthusiastically so.
Hotels are coming back, even while we hear very loud noise about recession.
Therefore – despite all the talk about High Interest Rates, High Inflation, and right now, the so-called US banking crisis, what is actually going on? (As an aside, some of us who were around back in the 1980’s did quite well with 15-18-20% interest rates. So apart from big developers, heavily mortgaged property owners and many first time home buyers, who’s really complaining about about a 4-7%interest rate now?)
Therefore – despite all the talk about High Interest Rates, High Inflation, and right now, the so-called US banking crisis, what is actually going on? (As an aside, some of us who were around back in the 1980’s did quite well with 15-18-20% interest rates. So apart from big developers, heavily mortgaged property owners and many first time home buyers, who’s really complaining about about a 4-7%interest rate now?)
At three conferences, upbeat was the order of the day. ADR* (see note) and RevPAR* (see note) are back to pre-pandemic levels, especially in the larger centres. Some is caused by the natural inflation impact on the dollar. ($100 in 2019 Canadian Dollars is $111.63 in 2023 – ie an increase of 11.63%.) So in Brian Leon’s Choice Hotels report he shows 20.4% increase in RevPAR, along with 17.4% improvement in ADR. Overall both measures are nicely exceeding natural inflation of the dollar.
Why are occupancy and these two indicators up? People are travelling! Business, Leisure and the newly coined term -revenge Travel – It’s all there and in many locations we are seeing the benefits.
Here in Alberta and Saskatchewan ADR is up along with the rack rate but RevPar is variable depending on location. For example, one full service rural hotel that we have tracked for a few years has gone from a 2020 RevPAR of $22.43 to $55.60 in 2022, a stunning 249%. (Note: This is room revenue only. Along with their other revenue streams they had a very, very profitable year.)
Because of these lower revenue numbers we have difficulty convincing out-of-province hoteliers to recognize the amazing cost per room value. $35,000 - $90,000 or even $100,000 versus a cost to build $150,000 to $250,000+ per room.
Nonetheless, there is great interest. Our Hotel Exchange Group gets many inquiries and we are making sales. There should be more.
What does it take to make it work in the uncertain economies here, especially in rural communities? While oil and gas
activity is up drilling is not, given the climate change issue.
It takes operators with this model:
Vision – If I owned this hotel, here’s how I believe I could be profitable during any period and capitalize on the upswings.
Marketing – Given my vision, here’s how I can market the hotel to bring in enough guests or long term rentals to keep my room and other hotel revenues up as I restructure to deal with this economy.
Management – I know that I can run a “tight ship” and ensure that the actual revenue we get, will be well maximized by scrupulous and strict management of expenses as I get the hotel fully profitable again.
Other points: As I’ve reported in the past, it is important to check hotel billed charges. In the past couple of months, I once more encountered a “slipped in” charge on a bill. The quoted rate for an event included ALL taxes, destination and related charges except parking. OK so far. When I checked the amount on my credit card there was an upcharge resort fee of $30 (no big deal – $30 bucks—about the cost of 1/3 tank of gas or a light meal for one) but an upcharge nonetheless. I immediately challenged it and pulled up my booking quote. Obviously the hotel backed out the charge BUT I had to check. If the charge had gone straight through to a corporate finance department the extra would have been paid. Always check the bill.
In the last issue of these Hotel News Notes, I mentioned SKAL, the International Hospitality Organization! My wife and I attended a terrific 40 th anniversary of the SKAL Rockies club at the unbelievably beautiful Chateau Lake Louise. It was a terrific evening in that wonderful hotel. Because we live only an hour and 45 minutes from the hotel, it is not a normal place to for us to visit, especially in the winter time. Correction – it is definitely a place to visit in the winter, even if you’re not a skier. Here’s a couple of quick pics.


And Lake Louise, fully frozen over with a massive skating rink, a wine and coffee bar made out of ice and the trail at the lake all make for a great day in the mountains. And of course there’s the world class skiing just “across the road” --- the Trans Canada Highway.
If you’re an owner, general manager or senior exec at a hotel, you should check out the closest chapter of SKAL. If there’s no chapter convenient to you, let me know at timjn_anderson@yahoo.ca and I’ll direct you to some clubs or the Canadian Director so you can organize your own.
So, are we UP, UP and Away longer term:
My prediction! Saskatchewan and Alberta are still pushing hard to get fully back to normal but overall it is coming.
Between low unemployment, government programs to invest in infrastructure as well as health projects for our aging baby boomers, along with the terrible and ridiculous war in Ukraine coupled with more “on-shoring” of production and distribution in the US and to some extent, Canada, we are moving back into the black!
Note: *ADR and* RevPar. Most of you receiving this, understand these acronyms but if you would like an explanation, please feel free to email me at timjn_anderson@yahoo.ca and I will provide one.