STAY Magazine, Vol. 3 Issue 2

The 2023 Investment & Finance Issue

GLAMPING luxurious, lucrative and IN VOGUE

A capital idea: Catching up with the June Moteliers

Deconstructing the look of the W Hotel

A New International Economic Order + the promise of global co-operation

March /April 2023

Volume 3 Issue 2

staymagazine.ca

Publisher

Big Picture New Media

45 St. Clair Avenue West, Suite 1001

Toronto, ON M4V 1K9

Editor-in-Chief

Stacey Newman stacey@staymagazine.ca

Director of Sponsorship & Advertising

Mike Egan mike@staymagazine.ca

Art Director

Jayesh Bhagat jayesh-bhagat.com

Contributors

Jim Byers, Jade Prévost-Manuel, Adam Sneyd, Annie Lecompte, Tamara Littlelight, Stacey Newman

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© Copyright 2023 All rights reserved. No part of this magazine may be reproduced without written permission of Big Picture Conferences/New Media, the publisher.

STAY is published six times per year by Big Picture New Media (BPNM), a subsidiary of Big Picture Conferences. For 26 years, Big Picture has been hosting the Canadian Hotel Investment Conference (CHIC) and other go-to conferences and events for Canada’s hotel industry. Subscription price: $110 per year, most single issues $18.95.

Big Picture Conferences

45 St. Clair Avenue West, Suite 1001

Toronto, ON M4V 1K9

Editorial Advisory Board

Robin McLuskie Managing Director, Hotels, Colliers Hotels

Brian Leon President, Choice Hotels Canada

Brian Flood EVP and Practice Leader, Hospitality and Gaming, Cushman & Wakefield

Scott Richer VP, Real Estate and Development (Canada), Hyatt Hotels

Ed Khediguian Senior VP, CWB Franchise Finance

Bill Stone President, Knightstone Hotel Group

Gunjan Kahlon VP Franchise Sales and Development, Wyndham Hotels & Resorts

Judy Sparkes-Giannou Co-Owner, Clayton Hospitality Inc.

Deborah Borotsik Senior VP, Beechwood Real Estate Advisors

Alan Perlis President & CEO, Knightstone Capital Management and CEO, Knightstone Hotel Group

Alnoor Gulamani President, Bayview Hospitality Inc.

Christina Poon General Manager, Hotel W New York – Union Square

Phil Thompson Business Lawyer, Thompson Transaction Law

Sandra Kanegawa Owner, Heritage Inn Portfolio, X-Dream

30 Architecture & Design

34 Economics

The New International Economic Order stumbled once before. Will it succeed a second time around?

38 Independent Voices

The Atlas Hotel REGINA, SASKATCHEWAN

41 Indigenous Initiatives Indigenous Tourism: An Economic Outlook

44 Crypto Cryptocurrencies are in crisis, but they are not going to disappear

JW Marriott Parq Vancouver

Photo by Ema Peter

Canadian hotels are open for business…

AS WE APPROACH THE HALFWAY POINT OF 2023, there are a couple of things we know to be absolutely true—the Canadian hotel sector has outperformed expectations and proved its mettle; people are travelling! Where, how and why we’re travelling continues to surprise us, and hotel businesses are rising to the occasion and adapting. Whether by fashioning new experiences, embracing technology or accommodating the changing needs of guests, hotels are once again positioned to thrive.

In this edition of STAY Magazine, you’ll find our Canadian Hotel Investment & Finance special section. Over the last months, our senior correspondents have spent a great deal of time connecting with and learning from experts from across Canada and the industry. These pages are full of business acumen, opinions, very real commentary and exceptional storytelling.

We’ve also brushed off our sense of adventure to bring you tales about glamping and other accommodation concepts from some of the remotest corners of the sector and our great nation. We talk about macro and microeconomics, cryptocurrency (spoiler alert, it’s not going anywhere), and we deconstruct some of Canada’s most interesting hotel projects.

We’ve spoken to the Indigenous Travel Association of Canada to get its economic outlook and hear about all the ways it is supporting Indigenous-owned and operated hotels.

And finally, a little shoutout to our cover hotel—the JW Marriott Parq Vancouver, photographed by Vancouver’s Ema Peter. The hotel is renowned for its ability to be many things to many people. It is both urban yet close to nature, tranquil yet exciting, luxurious and a champion of local. We fell in love with Ema Peter’s stunning photograph of the modern and minimalist JW Marriott Parq Vancouver.

To every stakeholder, owner, operator and traveller alike, thank you for sharing your stories with us.

Happy reading!

Sincerely,

Stacey Newman Editor-in-Chief

INVESTMENT & FINANCE

CANADIAN HOTEL INVESTMENT & FINANCE

By Jim Byers and Stacey Newman

The Canadian hotel investment landscape has changed and is normalizing once again. At STAY Magazine, we’ve done a deep dive with industry experts on the current state of all things investment + hotels in Canada. We look at investment strategies and asset management, lending and financing options, market conditions and demand drivers, equity and everything in between. The future of investment and financing in the Canadian hotel sector looks fairly bright. Here’s what the experts have to say.

OUR EXPERTS & CONSULTANTS

Carrie Russell, senior managing partner, HVS Canada

Fraser Macdonald, director, hotels, Colliers

Beth Potter, president and CEO, Tourism Industry Association of Canada

Gaurav Gupta, president, SAGE Holdings and SAGEBLAN Investments

Scott Beck, president and CEO, Destination Toronto

Marie Pier Germain, vice president, sales and marketing, Germain Hotels

Nicole Nguyen, senior vice president, CBRE hotels valuation & advisory services, CBRE Limited

Sylvia Occhiuzzi, senior vice president, Beechwood Real Estate Advisors

Rob Kumer, president and chief investment officer, KingSett Capital

Curtis Gallagher, principal, Canadian hospitality lead, capital markets group hospitality, Avison Young

Laura Pallotta, regional VP, sales and distribution – Canada, Marriott International

Ed Khediguian, senior vice president, CWB Franchise Finance

Robin McLuskie, managing director, hotels, Colliers

Brian Flood, EVP and practice leader, hospitality and gaming at Cushman & Wakefield

Alan Perlis, president and CEO, Knightstone Capital Management Inc.

Reetu Gupta, ambassadress, Gupta Group

HOTEL INVESTMENT & EQUITY

WHAT ARE INVESTORS LOOKING FOR THESE DAYS?

In a world that has changed materially from say a year ago—we are now in a market that is challenged by elevated interest rates, tight liquidity (both debt and equity) and an uncertain economic outlook, investors are looking for a thoughtful, deliberate and executable plan to create value. Buyers are comparing investment returns to a new risk-free rate paradigm. And so the cost of capital has changed, which means either each opportunity has to have more upside or less downside per unit of investment return. In other words, investors will only be compelled by better risk-adjusted returns because the risk-free rate—being what one can earn by simply buying t-bills—is more competitive today than it's been in a long time. The investment backdrop has simply changed—and it’s likely going to stick around for awhile.

- Rob Kumer

The highest price per room in terms of acquisitions, and correspondingly the lowest cap rates, tend to be in markets with high barriers to entry. Meaning that it is difficult to build new hotels and thus potentially oversupply the market. Examples would be Banff/Whistler as they have restrictions on new development but also markets like downtown Vancouver, where the limited land mass and high cost of land have limited hotel development in recent decades. There's a lot of pent-up demand for very limited hotel assets for sale. I think the urban core would be most desirable, but we'll end up seeing transaction activity across the board. There will be owners that have developed multiple properties in suburban or tertiary markets and they'll pick and choose the ones they want to sell.

Carrie Russell

–

Investors are looking for hotel assets that are additive to their portfolio and that contribute to their long-term investment return expectations. Many investors are seeking assets that have value-add opportunities and offer upside potential.

- Sylvia Occhiuzzi

WHAT ARE TYPICAL REASONS PEOPLE ARE SELLING HOTELS RIGHT NOW?

Thankfully, most owners managed through the severe downturn in 2020 and 2021 and in 2022 returned to managing their hotels in an environment with better operational

visibility. This has allowed investors to direct attention to their real estate portfolio strategy and possibly consider a disposition, which could be for a variety of reasons such as an emphasis on core assets, operational fatigue, deferred capital requirements, brand-mandated PIPs, and estate planning.

- Sylvia Occhiuzzi

Sellers are often compelled by similar forces. Either they think the opportunity to create value has largely been exhausted or they need liquidity. I think today, many sellers—not just hotels but many forms of commercial real estate—are looking to build liquidity. In some cases, liquidity is needed to satisfy lenders or other stakeholders (like private fund investors who are looking to monetize or redeem investments), in other cases, many institutional investors are re-weighting their real estate portfolios, either to different geographies or lightening up on real estate generally to bring overall investment portfolio mix weighting back into line with long term objectives. I’d be surprised if many were selling because of operating fundamentals. Seems to me that the hotel asset class is on really solid ground and operating fundamentals appear strong. In the short term, there doesn’t appear to be much to negatively impact that.

- Rob Kumer

IS THERE ONE RECENT SALE THAT MADE YOU STAND UP AND TAKE NOTICE?

I think InnVest's acquisition of the two properties in Banff really showed a shift in the mindset of a big institutional owner who typically would buy into the urban core now looking at a true leisure destination. The resort market always had a little of a stigma around it, that it was too risky and too up and down, but I think that changed during the pandemic.

– Carrie Russell

The sale of the Travelway Inn Sudbury is a great example of a limited-service hotel product that drew mass appeal. The hotel is an exceptionally maintained, rooms-only property that offered operational flexibility in a stable market with a strategic location. The property drew multiple offers in a very short period and demonstrates that there continues to be a strong degree of interest from a variety of investor groups, with capital that stands ready to be deployed and a lending environment that supports hotel investment.

- Sylvia Occhiuzzi

The sale of Le Crystal in Montreal was interesting because it was creative, it was a condo sort of hotel and so there was a lot of complex structuring the buyer had to do to control the units, and around how they were going to reposition the hotel. That was kind of a neat story to show the creativity in the market, especially in a high-barrier entry urban market to get into, where sometimes it’s a little messy. We have some fun things in the works. This year we’ll have more to talk about. [Laughs]. No, I won’t tell you!

Robin McLuskie

–

We tracked the largest sales last year across the country and the three largest were all for alternate uses. I can't recall that happening before. One was sold to the city of Toronto for social housing, the Bond Place. One was sold in Niagara Falls for redevelopment with a much bigger hotel, The Oakes, and the last one was in Montreal, the old Residence Inn, which was sold for conversion to residential. That was striking to me.

– Brian Flood

WHAT IS THE INVESTMENT HORIZON, SHORT OR LONG -TERM?

You can’t look short term for hotels. Most require renovations and such. You want to buy, you want to spend some time renovating, and you want to stabilize. Most people are looking mid-term, maybe five to seven or eight years—trying to buy something that’s really good long term with a stable cash flow.

– Alan Perlis

IS THERE ONE TYPE OF PROPERTY OR GEOGRAPHIC MARKET THAT'S DRIVING ACTIVITY?

Limited and select service hotels in secondary and tertiary markets showed remarkable strength through the pandemic and highlighted the benefits of a rooms-focused operating model. Resort and leisure-focused markets also came into view for many investors as a lift in the quality of resort product highlighted an opportunity for stronger rate growth and better profit margins. In addition, the “work from anywhere” philosophy is drawing people to spend time in traditional leisureoriented markets outside of the traditional holiday periods. The flattening of these seasonality patterns, to some degree, has resulted in better operating margins. Of course, major urban markets continue to be a strategic target for many buyers despite the impact Covid had in downtown markets across Canada. These are global gateway cities with strong barriers to entry and a lack of hotel inventory.

- Sylvia Occhiuzzi

In terms of transactions, the largest trends we saw last year were a mixed bag. The InterContinental in Montreal was probably the biggest one that closed. And then there are two properties in Banff that InnVest purchased. I wouldn't say there was any specific area, but I think buyers are taking an opportunity now to look at the larger markets and larger assets, and trying to take advantage of a dip in the cycle. I'm not sure that dip has materialized.

– Carrie Russell

I’ve seen a lot of trading in secondary and tertiary markets outside of Toronto, Montreal, Vancouver and Calgary. Looking at 2022, 75 per cent of the deals were under $10 million, so they were smaller. We’ve seen a lot of investors who may not have looked at Northern Ontario or such places to take a second look. -

Fraser Macdonald

Certainly, extended stay is one that everybody wants and is underserved in Canada. I think if anyone is looking at new development, they’re looking at the extended stay model like the Residence Inn or TownePlace Suites. We also are seeing a resurgence in resorts, because they performed so well during Covid especially when they had other value-add opportunities such as excess land you can capitalize on. So many resorts were undercapitalized. Older generations owned them and hadn’t put any money in. I think there’s been a wave of new ownership in them, and some of them are very institutional and very well capitalized, so they’re putting money into them.

– Robin McLuskie

Most of what we see is in secondary and tertiary markets. We haven't seen very many sales in the larger city centre areas, largely because most of the hotels in city centres are well capitalized. The owners have deeper pockets.

– Brian Flood

HOW DO HOTELS COMPARE TO OTHER ASSETS?

I love the hotel asset class in this environment. Very strong operating fundamentals, elevated replacement cost, tough to finance new supply and it’s the only asset class of the major commercial asset classes where you can mark your revenue to market each night. And it’s my base case view that inflation sticks around longer than many expect and so I think the hotels are going to outperform because they can take advantage of an inflationary environment.

- Rob Kumer

Hotels are actively managed, and they appeal to entrepreneurs. I think someone who can create value through strong management skills and wise use of capital can certainly reap some significant value gains. You’ve also got to be comfortable with that risk. It can be a roller coaster.

– Brian Flood

IS THERE ANYTHING THAT YOU'RE SEEING OR THAT YOU THINK MAY COME DOWN THE PIKE THAT IS INTERESTING?

Looking at the nature and the turmoil in the retail and office landscapes, I would argue that hotels have become less risky than some of the other traditional asset classes. Where does the capital that was raised go? Perhaps some of it gets earmarked more towards hotel, which is good because it's liquidity on debt inequity that will stimulate transaction activity. - Curtis

Gallagher

DO YOU SEE SOME CONVERSION OF NON-HOTEL BUYERS BECOMING HOTEL BUYERS OR TAKING AN INTEREST IN THE HOTEL INDUSTRY?

Absolutely. We've seen it in deals that I've done historically. So it's not even a new situation. It is one where diversification will perhaps become another driver—more of a strategy of diversification. A regional real estate investor has, perhaps, now seen the value of adding a hotel to the portfolio. Look at the trade of the InterContinental Montreal acquired by MACH. - Curtis

Gallagher

ARE HOTELS SOMEWHAT INFLATION-PROOF?

Yes. I think the beauty of hotels is if your costs go up you can charge the customer another $10. It’s proven to work given the rate increases we saw last year. If you’ve got a long-term office lease, you’re stuck with it. –

Robin McLuskie

Because our business is residential as well as hotels. we're not necessarily inflation-proof. I don't think there are too many industries that are inflation-proof. –

Reetu Gupta

WHAT KIND OF YEAR-OVER-YEAR CHANGES ARE WE SEEING IN TRANSACTION VOLUME?

For 2022 we tracked around $1.6 billion in hotel sales. The previous year it was just under $2 billion, so we’re down about

20 per cent. The component for ongoing hotel use was up 10 per cent year over year in 2022. - Fraser

Macdonald

WHAT ABOUT TRANSACTION VOLUME FOR 2023?

I think there's quite a bit in the pipeline. We've actually been involved in a bunch of transactions that have closed and are closing, and we believe transaction volume will be in the $1.5 billion to $2 billion range, so we could surpass that $1.6 billion figure easily. It's another strong trading year.

– Robin McLuskie

WHAT FACTORS ARE INFLUENCING TRANSACTIONS NOW?

I'm seeing now that yield is becoming important again. Operating fundamentals have returned to pre-Covid levels, so the hotels are doing well. You're seeing more cap rate deals and some pretty nice cap rates in secondary/tertiary markets. A big reason you'll see trades is the rationalization of portfolios. Some are doing portfolio reviews and saying, “I'm going to get rid of one or two because of interest rates or diversification reasons.” You’re seeing some refinancing happening because of interest rates. A lot of times during Covid the brands were being lenient, not making owners spend the capital because the hotels were empty. But now there’s a real push for the brands to say “Hey, you know what, guys? You have to renovate." Owners might say “I don’t have it in me,” so they’ll trade and let the next owners renovate.

– Robin McLuskie

The cost of capital is an important factor in bringing a deal together and one that has changed meaningfully in the last 12 months. The Bank of Canada’s key interest rate hikes has increased the cost of debt and impacted the amount of cash flow required to service loans. - Sylvia

Occhiuzzi

IS THIS A TOUGH TIME TO BE BUILDING A HOTEL IN CANADA?

Although volume of new hotel supply has been below typical levels in the last few years, the lack of hotel acquisition opportunities is compelling investors to reconsider hotel development. In addition, the cost to construct has begun to stabilize and there is better lead time visibility, which is giving groups greater confidence in moving forward with new hotels.

- Sylvia Occhiuzzi

It definitely is. It's not been easy. Naturally, we were also building through Covid. So now, with prices going up, it's quite difficult. But we've climbed ahead, and we've planned for this. We wanted to make sure one of our hotels (The Canopy by Hilton Toronto Yorkville) was open just as Covid ended, so we can get all those excited guests waiting to come back to Toronto. I feel Toronto has always been such a worldly, global city but it's been underrated. We've been the underdog, so there are not enough prime, beautiful, boutique lifestyle hotels in Toronto. I feel Toronto is primed for new, amazing hotels that can be competitive with cities like Vancouver or New York.

– Reetu Gupta

WHO ARE THE TYPICAL HOTEL BUYERS THESE DAYS?

It's a combination. People in the business are always looking for opportunities. I also continue to see on a smaller scale, for smaller assets, people who are new to the industry that are coming from other industries where they've done quite well. They're entrepreneurs, they’re risk takers, they may have friends or relatives already in the business, and they have the capital to invest.

– Brian Flood

WHAT ARE YOU SEEING IN TERMS OF ACTIVITY?

It hasn't been as active on the transaction side. But we're still busy. We're seeing people consider market studies. They're looking at, “Is it time to restart my new build project? Is it time to approach the lender so I can be ready when the market fully recovers in a few years?” There's also plenty of refinancing activity happening.

–

Nicole Nguyen

WILL CAPITAL BE EASIER OR HARDER TO RAISE THIS YEAR?

There seems to be a lot more scrutiny today than six months ago around how deals are underwritten. The uncertain economic environment coupled with the increase in lending costs are two reasons some investors have decided to take a wait-and-see approach to provide capital to hotel deals. There is still a lot we don’t know: What will the health of the Canadian economy look like in the next 12 to 18 months? How long the inflationary period will last? What geo-political event may impact Canada next? Uncertainty leads to hesitation.

- Sylvia Occhiuzzi

Definitely still harder. We’re not out of the woods yet. We’ve got [the war in Ukraine], an inflationary environment and an increasing rate environment. There’s still a lot of uncertainty.

- Gaurav Gupta

There’s no question that we are in a capital-constrained market. Equity investors are reluctant to commit more to real estate and lenders are holding their liquidity tightly and protecting it for the best risk-weighted projects. This year is going to be interesting for the best performers and those who have cultivated the best relationships with brands, equity stakeholders and creditors. It’s in challenging markets like 2023 where those with access to a strong balance sheet and deep relationships can play offence and find some compelling opportunities.

- Rob Kumer

Way, way, harder. I think the reduction in equity markets that happened in the summer when equity markets crashed 25 per cent had a negative effect on what we do because people started to hoard their money. You take the reduction in equity markets and concern about a recession and then you have a lot of funds that have allocation issues. On top of that, their equity allocations are way up because the return is down and real estate hasn’t moved, so they’re over-allocated to real estate. You put all of this together and it’s more challenging to get people to invest.

– Alan Perlis

HOW DO YOU BALANCE EQUITY GROWTH WITH MANAGEMENT AND BRAND RENOVATION OBJECTIVES?

It’s more challenging than ever. No hotels, or very few hotels, were renovated during Covid. At the end of the day, brands are going to win this one because you have to start renovating and therefore you have to put money back in. You may see some groups that own 20 hotels and never thought they’d sell any of them look to sell one or two … that are less core, to raise some capital to do some renovations.

– Alan Perlis

When we renovate and reposition, I try to use materials and products and styles that have longer life cycles. For example, for hard surface flooring, I look closely at wear levels, soundproofing levels, and water resistance levels. I hope to get 15 years (of life) instead of seven to 10.

- Gaurav Gupta

LENDING & FINANCING

ARE YOU WORRIED ABOUT INCREASED LENDING RATES?

Lending rates have increased materially over the last year, but they increased off of historical lows if considered over a much longer period. My focus of concern would be those projects that were underwritten and levered on the assumption that those low rates were sustainable and didn’t require any downside access to liquidity. But, frankly, in Canada, that isn’t common. Most owners have the liquidity to bear the short and medium-term pressures.

Ed Khediguian

WHERE DOES THE CAPITAL COME FROM TO FUND ACQUISITIONS? IS IT ONE INDIVIDUAL OR SYNDICATED AMONGST SEVERAL?

I would say in the hotel industry in Canada it’s either going to be an individual/family that owns 10+ hotels and it’s their capital or a syndicate led by an individual or group backed by many high-net-worth investors. In Canada, you don’t have large corporations per se as you do in the U.S., or large funds buying hotels. The pension funds in Canada don’t like hotels. For the most part, you’re talking about either small hotel corporation owners which are individually owned, I believe, or groups who go out and buy hotels and syndicate the equity typically amongst high-net-worth or ultra-high-net-worth investors because, again, the typical pension funds and even smaller pension funds don’t understand the hotel industry and don’t love it. –

Alan Perlis

I would say 1) the quality and level of experience of the investor/owner as well as the overall liquidity of the ownership to sustain the quality of the asset, 2) state of repair, branding, positioning within the market, and, 3) supply risk in the market. -

Ed Khediguian

HAVE BORROWERS ADJUSTED THE FINANCING TERM GIVEN THE HIGH INTEREST RATES, E.G., SHORTER OR LONGER TERM?

Borrowers coming to maturity in the current period are opting for shorter term lengths in anticipation that rates will come down over the medium and long term. The expectation is that a certain level of economic slowdown will stabilize rate increases and potentially at some point be reversed.

– Ed Khediguian

WHAT ARE TODAY’S RETURN EXPECTATIONS?

I think returns or expectations were going down before Covid because the cost of capital was so cheap and opportunities were becoming so expensive. Now you’re having them pop up a little. –

Alan Perlis

WHAT ARE SOME OF THE GEOGRAPHIC SOURCES OF EQUITY? CANADIAN? THE U.S.? OFFSHORE?

Toronto and Vancouver have a lot of foreign investment. For Quebec, it’s mostly Canadian, maybe because of the political environment and higher barriers to entry for foreign investment. There’s a wide array of interest in Canada. We have a stable environment, and the Canadian government showed a lot of support for the industry (during Covid).

- Gaurav Gupta

WHAT’S NEEDED TO DEVELOP AND MAINTAIN A STRONG LENDER RELATIONSHIP?

You need good borrower behaviour, transparency and communication, and also professional management of operations and reporting. I’d also say maintaining capital asset expenditure, payment of taxes and deductions at source, and strong relationships with other surrounding suppliers (e.g., franchisor, employees, etc.). -

Ed Khediguian

TOURISM & HOTEL DEMAND DRIVERS

WHAT ARE TOURISM ORGANIZATIONS DOING TO DRIVE BUSINESS TRAFFIC?

We have made a recommendation in our submission to the tourism growth strategy that the feds establish a national fund, like an incentive fund, that destinations can use to attract events back to the country. We also have talked about the need for a new and improved infrastructure. For instance, Calgary has a new convention centre, but a hotel was not built with it. Toronto needs a bigger convention centre to get it into at least a tier-two market. Right now, we're tier three because of the size of our contiguous space. To get those big American shows, for example, we can't physically host them.

- Beth Potter

This will be a very, very strong year in Toronto. In many ways, 2023 will be at or exceed pre-pandemic levels. There are a couple of things that are contributing to that. Leisure demand is still very high, and that's domestic leisure demand. We are still substantively below what you would call international visitation. We're still 60 per cent below pre-pandemic levels for U.S. visitation.

Scott Beck

–

SUBURBAN HOTELS SEEMED TO DO BETTER DURING THE PANDEMIC THAN DOWNTOWN HOTELS. ARE PEOPLE RETURNING TO DOWNTOWN PROPERTIES?

Those hotels that had both a really strong business travel component as well as leisure, once the pandemic was in the rear-view mirror and all the things to do, the events, concerts, sports, once all those things began to come back, those business hotels saw a really significant market shift. They were heavier on leisure, transient leisure than on business travel. They had seen a really strong recovery in the second half of 2022 and into 2023. All those people who'd been in their houses, hadn't gone to a Raptors game, hadn't gone to a Blue Jays game, hadn't gone to a concert, hadn't seen Harry Styles, they were like “I don't care what it costs me, I'm going to a hotel, I'm going to stay at the Royal York, and I'm going to go to a Leafs game.” You could just look at the event schedule in downtown Toronto and hotel occupancy followed that. Before the pandemic, we were a market that had really strong occupancy Monday, Tuesday, Wednesday, and then if you had an event the weekends were full. Now it's the exact opposite; Thursday, Friday, Saturday and Sunday the hotels are full. And they're all sort of working on getting that transient corporate biz back on Monday, Tuesday and Wednesday. –

Scott Beck

TRENDS

ARE WE SEEING MANY DISTRESS SALES?

There's virtually no distress in the market. I think there are buyers out there looking for distress [laughs] ... but it doesn't exist.

– Carrie Russell

You kind of step back and say well, the owners survived this global pandemic, they’re not going to let their hotels go into distress because of interest rates going up a bit. They’ve come this far so I think for the most part we don’t see it as a huge issue. –

Robin McLuskie

ARE INTEREST RATES A BIG ISSUE?

No. Our deals are spread out. Our renewals aren't all due this year. We've obviously borrowed money and we're heavy on capital. It's an issue but it’s not keeping me awake at night.

– Marie Pier Germain

DEFINING ‘RECOVERY’ TODAY…

We think we'll still be short a point or two (at the end of the year). The major urban cores are still going to lag, in part because you need all the international demand back, and that's very slow still. Some of it is a matter of airlift. Some governments are still telling people not to travel internationally. Business travel also is an issue. Big businesses were booking in 2020 for 2023-2024, and at that time Canada had its border fully closed. When people were looking at where to hold their conference in ‘23 or ‘24, they were hesitant to choose Canada. They couldn't be assured what the rules would be by that time. We'll miss a couple of years of booking business.

– Nicole Nguyen

The talk of recession is probably what we're paying attention to right now. With it being a leisure-driven recovery and a rate-driven recovery, the concern would be that there's softening in consumer buying habits. We're not that concerned about losing the corporate market because it hasn't come back to its full state. Normally in a recession environment, you worry about your corporate business slipping away. In this case, I think it's more about consumer spending and if the consumer still has the appetite to spend on hotels to the degree they have in the past year.

– Carrie Russell

I think there is potential for more demand recovery, and I do think rates will largely be maintained. We are at record-high average rates going into this year, and I think those higher rates will largely sustain. –

Brian Flood

How well the industry has performed coming out of the pandemic is mind-blowing. You look at all the past cycles and go back and listen to what we were saying, which was that demand will recover and then rates will follow two or three years later. To see the way the rates just roared back even in the face of softer demand from prior years. it's not like any of the three or four other cycles I've watched. It's certainly not how we predicted it. –

Carrie Russell

Our fourth quarter earnings were very strong. Q4 2022 was a very strong quarter for Canada, with RevPAR up 79 per cent to 2021 and up 18 per cent to 2019. What is most exciting about Q4 results is that occupancy for the quarter was up to 2019 levels, driven by strong group and leisure demand. Day-of-the-week trends continue to show that trips blending leisure and business are on the rise. This trend tells us that not only are mid-week travel bookings increasing, but also the length of stay as well. In fact, we’re seeing a growing number of stays in the 8+ night category, which is fantastic for both destinations and hospitality businesses. We were very excited to introduce the W Hotel brand to our largest market, Toronto, in July 2022. In addition to the W Toronto, we opened seven new properties in other markets such as Calgary, Vancouver, and Montreal throughout the year. –

Laura Pallotta

I'm pretty bullish. I don't predict the future, but we did these numbers with primarily a domestic market. When we start to see more international travel, that will be very strong for our markets. –

Carrie Russell

With the rise of bleisure travel, we’re seeing momentum in the longer stay, suite-style accommodations that allow guests the space to conduct business, while having the additional space to relax with travel companions/family. Our Homes & Villas by Marriott Bonvoy (HVMB) segment has shown significant growth. Comparing Q2 2019 with Q2 2021, we saw an increase in gross bookings of more than 400 per cent.

– Laura Pallotta

There is significant energy from our business customers around meeting again after being apart for several years. Recovery of business transient and group demand is still lagging leisure, but as greater numbers of employees return to the office, we anticipate that demand will improve. While there has been a slow and steady return to offices, we are trending ahead of where we anticipated being at this time. The small and medium businesses have been the first road warriors to return. –

Laura Pallotta

STAFFING…

We do have to be very creative in our hiring strategy, whether it's with students, or immigrants. We don't welcome as many people in Quebec, so it's still a bit hard. We do work with temporary immigrants. We bring older folks back into the labour market. That's fun. That's great, to have those opportunities for people 50-plus. They’re pleasant to talk to, and they're happy.

Marie Pier Germain

–

Staffing has been an issue in Quebec, but I would say that over the last couple of months, it's starting to get better. We're starting to see some light at the end of the tunnel, and operations have stabilized on that front. -

Gaurav Gupta

The federal government recently made it easier for Canadian companies to hire students and families of workers here on a temporary basis. All of those little steps are really nice, but honestly from an immigration standpoint, we need our own program, specifically for our industry. And there's a whole lot of work to do with citizenship. We're talking about how we change the mindset around jobs in our industry. They're often thought of as low-paying, entry-level, seasonal jobs. We have those, but we also have amazing career opportunities. We need to look at ways of getting into schools at a younger age to start talking about what our industry looks like.

- Beth Potter

GLAMPING

IS HERE TO STAY— HERE’S WHAT’S DRAWING

TRAVELLERS IN

Canada’s strong domestic travel recovery has paved the way for a boom in glamping travel, the luxurious alter ego to roughing-it-style camping. But what makes one glamp site stand out from another? We asked glampers and properties across Canada to find out.

By Jade Prévost-Manuel

ARINA TERENTJEVA NEEDED TO UNPLUG. It was early January, and the digital marketing specialist, based in Toronto, had recently left her job. To celebrate the transition, she and her partner booked a two-night stay at Back Forty Glamping, a rural glamping property near Georgian Bay that she’d seen on TikTok.

Her accommodation? A geodesic bubble looking out onto 25 acres of mixed forest, equipped with a fully stocked kitchen, three-piece bathroom, personal hot tub, electricity and wood-stove heating, and a skylight for stargazing come nightfall.

“I just kind of needed to shut off and be one with nature,” said Terentjeva. “The place was a two-hour drive from Toronto, we have access to a vehicle, and so we thought, okay, let's try this.”

Terentjeva is one of many Canadians who, over the last few years, have tried and tested the Canadian glamping landscape. A portmanteau of glamorous and camping, glamping offers travellers the opportunity to enjoy swaths of unspoiled forest and peaceful natural spaces without the discomfort of tossing and turning in a leaky tent.

Glamping is a form of slow travel that prioritizes offering guests connection with nature. Many properties offer only a handful of rooms, typically in semi-open-concept structures like yurts, domes, and canvas tents. At bare

Concepts

minimum, they’re equipped with cozy beds and are built from materials that can weather the elements. The most elaborate structures boast full kitchens, TVs, porcelain tubs, and their very own saunas.

When it comes to Canada’s tourism sector recovery postpandemic, domestic travel is leading the way according to Destination Canada—in fact, it’s set to meet 2019 levels this year. So are sustainable tourism opportunities, a consumer preference that, once niche, is now commonplace. Both have set the stage for interest in, and opportunities for, glamping experiences and property development.

Experts expect North America to become the fastest-growing region in the glamping industry over the next ten years, as per The Business Research Company’s “Glamping Global Market Report.” But what makes a glamping property stand out?

Guests and property owners agree that innovation is critical for staying competitive—the more unique your property, the better. So are personal touches, and for many people, proximity to urban centres. For Terentjeva, Back Forty Glamping’s proximity to Toronto, as well as downtown Meaford—just a 15-minute drive from basecamp—made the property an easy sell for her winter getaway.

“We like the aspect of being close to other things,” she said. “It’s definitely nice to be around places, just so we can always leave, we can explore ourselves.”

STAY Magazine checked in with three properties across the country, and their guests, to get to the bottom of what consumers are looking for in glamping experiences.

Unique stays relatively close to town Back Forty Glamping | Meaford, Ontario

When company for his traditional camping trips into Algonquin’s backwoods became difficult to find, former teacher Scott McIntosh—along with several family members—came up with the idea of Back Forty Glamping, a way of bringing the backwoods experience closer to home and making it luxurious. It took five years to bring the family’s vision to life, from purchasing the right piece of forested land to designing, building, furnishing, and opening the domes for business.

The Georgian Bay property is home to a pond, creek, forest, and three domes—transparent structures supported by a

Concepts

galvanized steel frame that offer guests panoramic views of Back Forty’s mixed woods forest year-round. Each dome is equipped with a full kitchenette, bathroom, king-sized bed, hot tub, and private deck.

Back Forty Glamping’s focus is on offering their guests a highend glamping experience ensconced in nature, yet close to town. Owen Sound is just a 20-minute drive away. Guests can order wood-fired Neapolitan pizzas from nearby Thornbury, charcuterie boards from the property’s network of local chefs, and even spa treatments directly to the dome. Or, they can leave the domes to explore the area themselves.

“We try to encourage people, you know, come to the dome and let it be your basecamp and then jump out from there […] but we do find it's more like a 70/30 split, where 70 per cent of guests are actually just coming to relax and enjoy the domes and 30 per cent are like hey, let’s check out South Georgian Bay.”

Like many glamping resorts, Back Forty’s business has been driven by the rise in social media’s influence, a major factor driving the glamping market’s growth. Together, Gen Z and millennials have historically accounted for the largest demographic group in the North American glamping market, and in 2019, made up as much as 60 per cent of it, as reported in KOA Campgrounds' “2019 North American Glamping Report.”

Most of Back Forty’s customers—ranging in age from their 20s to 60s—are couples celebrating special occasions like engagements, anniversaries, and birthdays, and many of them find out about Back Forty by word-of-Instagram. Since they opened to guests on September 1, 2022, McIntosh says they’ve enjoyed 100 per cent occupancy. They have approvals and plans to install five more domes on the property, with the first of those going up in the spring.

Opportunities to unplug

Flora Bora Forest Lodging | Emma Lake, Saskatchewan

Since Flora Bora Forest Lodging’s inception 12 years ago, owner Karen Wasylyk has focused on designing cozy spaces conducive to unplugging from the stresses of daily life.

Concepts

“When you look out the windows, you have nature all around you,” says Wasylyk. “And the guests, they’re ready to relax. They're ready to crack a beer, sit on their deck, watch the migratory birds, or take the canoe out for sunset paddles.”

Most of Flora Bora’s guests, primarily couples ranging in age from their late 20s to early 70s, travel from within Saskatchewan to the 30-acre property in Emma Lake, Saskatchewan, just a short distance away from Prince Albert National Park. Flora Bora is home to three yurts, each equipped with its own bathroom, kitchen, barbecue, heated fireplace, and bonfire pit, as well as personal touches like bathrobes and handcrafted soaps. In place of flat-screen TVs or the latest gaming console, you’ll find board games for making memories with loved ones. The intermingling of luxury and nature is what prompted Saskatoon photographer and videographer Collin Unger to book a weekend stay at the property in the fall of 2019. So too was the simplicity of a vacation without technology or the distractions of home.

Industry reports attest to the fact that the opportunity to disconnect has become a growing desire among travellers who, in the wake of the global pandemic, are prioritizing travel focused on wellness and self-care.

“I like the idea of unplugging, and I mean, I would travel to a place, even if it was a little bit further off the grid, for that experience,” says Unger. “But the idea of feeling a little taste of luxury while being in nature is just a unique experience.”

Bucket list experiences Free Spirit Spheres | British Columbia

When it comes to unique stays, few properties offer the experience that Free Spirit Spheres has provided its guests for more than 15 years. The treehouse resort in the temperate rainforest of Qualicum Beach, B.C. is home to several suspended, hand-crafted sphere homes complete with their own beds, electricity, and furnishings.

Building a spherical treehouse was an idea that captivated Tom Chudleigh more than 20 years ago “and just wouldn’t go away,” the power engineer and Free Spirit Spheres owner says. Today, his property is home to several wooden and fibre-glass spheres that he has spent thousands of hours creating.

Each sphere is nestled in the trees, suspended between 10 and 14 feet above the ground by a series of ropes and accessible via a wooden staircase. Within a short walking distance are the property’s compostable toilets, cookhouse, bathhouse, and sauna.

“People see the spheres [on social media, in magazines], and they put it on their bucket list,” says Chudleigh.

The desire for unique outdoor experiences has been a major consumer preference driving the popularity of glamping. When photographer Maryn Simrak first came across Free Spirit Spheres when planning a camping road trip in 2019, she was immediately hooked on Chudleigh’s unique structures.

“My friend found the spheres online, and we thought the concept was too cool to pass on,” says Simrak. “The suspended spheres in the trees were definitely the pull for us.”

THE GLOBAL GLAMPING MARKET IS EXPECTED TO GROW FROM $2.27 BILLION IN 2021 TO $2.57 BILLION IN 2022 AT A COMPOUND ANNUAL GROWTH RATE (CAGR) OF 13.1 PER CENT.

THE GLAMPING MARKET IS EXPECTED TO GROW TO $4.23 BILLION IN 2026 AT A CAGR OF 13.3 PER CENT.

– Research and Markets

“Glamping Global Market Report 2022”

These days, Chudleigh is on the hunt for a new property that will be able to house all six spheres he has constructed and is ready to string up in the forest. Only exceptional forest will do, he says—while the spheres have been carefully crafted and designed to add a dose of luxury to his guests’ trips into nature, "it's the forest that really makes the experience.”

Caption

HOTEL INTELLIGENCE DIRECTLY TO YOUR INBOX

CANADA’S FIRST CANOPY BY HILTON AIMS TO REPRESENT A CITY AND ITS PEOPLE

By Jim Byers

CANADA’S FIRST CANOPY BY HILTON has officially opened, and it’s going to help transform a neglected area of downtown Toronto.

A ceremony filled with Indian music and dancing, champagne and great food, was held in February to mark the opening of the 184-room Canopy by Hilton Toronto Yorkville. It’s a glossy, colourful property designed by the renowned Toronto firm Studio Munge, which is responsible for the look at the posh Muir in Halifax and handled the remake of the Park Hyatt Toronto.

The Canopy is a production of Hilton, Easton’s Group of Hotels and The Gupta Group. It’s the 20th hotel in the burgeoning Gupta Group, with more on the way.

“What I love about Canopy is each hotel means something different,” Reetu Gupta, ambassadress for The Gupta Group and Easton’s Group of Hotels, told STAY Magazine “Our hotel is all about Toronto, all the regions, all the artists.”

As she spoke, Gupta was standing alongside a wall of local goods in what’s called the “welcoming area” of the hotel, rather than the lobby. There were locally-made candles

on display, as well as Toronto-made snacks and drinks and other products.

“I call it upscale lifestyle,” Gupta said. “It’s very energetic. But it’s not pretentious.”

Guests will find whimsical touches, such as a spray-painted sign pointing the way to the washrooms on the main level. One room they showed off on a tour had a metal sculpture that spelled out “The Six,” the nickname for Toronto that was apparently dreamed up by local singer/songwriter Drake.

The Canopy by Hilton is on the south side of Bloor Street East, just a few steps west of Sherbourne Street. Unlike the posh stretch of Bloor west of Yonge, Bloor Street East has never really taken off. Now, with the vibrant Canopy and the recently opened W Hotel just two blocks away, the area should definitely see a lift. Another big help will be the 46 floors of condos above the Canopy property, which occupies the first nine floors of the building.

The Canopy is maybe 50 metres from the Sherbourne Street station on the Toronto Transit Commission’s number two subway line, and it’s only four blocks from Yonge and Bloor.

The leafy, upscale Rosedale neighbourhood is maybe a twominute walk from the hotel.

Steven Robinson, chief operating officer of Easton’s Group of Hotels, said a lot of hard work went into the project, and that some people started back in 2015.

“We’re going to be a highly successful hotel,” he said. There will be obstacles, “but we’re going to have a blast doing it.”

Jeff Cury, senior director, development, Hilton Worldwide told Gupta Group founder, president and CEO, Steve Gupta that he outdoes himself every time he opens a new hotel.

“We’re so proud to open the first Canopy in Canada,” he said. “The bar is set very high. I know I shouldn’t say this, but this is by far the nicest (Canopy by Hilton) I’ve seen.”

As Cury was speaking, a nearby cell phone rang.

“Someone calling about another franchise,” he said with a laugh.

Gupta said he and Reetu met with Hilton to talk about a new brand for Canada some time ago.

“Her eyes just lit up.”

Gupta joked about the cost of the design work but suggested he didn’t mind the investment.

“I’m very proud to help open the first Canopy brand in Canada, the first of many,” Gupta said. “We also have two Curio by Hilton brands coming, in the Distillery District and in the (Toronto) Entertainment District.”

Gupta started his business career with a truck stop near Port Hope, Ontario. He’s now at the helm of a company with 20 hotels in Ontario and Quebec, many near Toronto Pearson Airport.

"We're excited to open Canada's very first Canopy by Hilton hotel in Toronto. With its premium location, the hotel will bring a unique blend of sophistication, convenience and urban living," said Reetu Gupta. "Nestled between the picturesque Yorkville neighbourhood and the wooded Rosedale neighbourhood, Canopy Toronto Yorkville offers guests an exciting new way to experience the city."

"Joining a global portfolio of more than 35 sophisticated boutique hotels, Canopy by Hilton Toronto Yorkville is an incredible property to mark the brand's Canadian debut," said Jenna Hackett, global brand leader, Canopy by Hilton. "With its local vibe, bespoke culinary offerings and elevated design, Canopy Toronto Yorkville offers an inspired stay that embodies the experience of the Canopy by Hilton brand."

In a nod to its unique location between bustling Yorkville and forested Rosedale, the property pairs oak features with copper accents to highlight the unique connection between nature and cosmopolitan life. "Just-Right" guest rooms also incorporate the brand's iconic canopy bed and inviting warmth

Canopy, exterior

Canopy, public space. Photo by Jim Byers.

Canopy, guest room. Photo by Jim Byers.

while public areas include a sleek indoor pool, a modern fitness centre incorporating local street art, a transfer lounge and 3,500 square feet of meeting space.

Under the leadership of Justin Raponi, executive chef and lead culinary enthusiast, Canopy Toronto Yorkville will boast two on-site dining options. Día serves as a gathering place to enjoy seasonal fare and eclectic wines and spirits. Día offers a variety of dishes including memorable cheeses, Roman-style pizza and more. Visitors and locals alike can also enjoy the restaurant's signature wine program and sample libations as a part of Canopy's bespoke evening tastings.

For lighter fare, Virtu Café & Provisions will serve purposefully sourced, locally inspired dishes and foster a connection with the community.

In addition to 139 “regular” rooms, the hotel offers 34 premium “Canopy rooms” and 11 suites, with 55 connecting rooms.

All rooms feature Nespresso coffee makers and Thankyou bath products. Rooms have high-tech devices to control the lights and curtains, as well as lots of splashes of orange, the official colour of the Canopy brand. There are still water dispensers on every floor and glass bottles in every room.

There’s an on-site gym and fitness centre that will offer yoga classes and a saltwater pool.

The Canopy also offers nearly 3,500 square feet of meeting space, with state-of-the-art equipment. The largest room is

855 square feet, so it’s a great fit for small or medium-sized business sessions.

"Canopy Enthusiasts,” hotel team members with local knowledge, can connect guests to the city's most popular sights or local hotspots, and bright free Canopy Bikes are available so guests can explore the area; perhaps a leisurely ride in Rosedale, a visit to Riverdale Farm or a trip along the bike trails of the Don Valley.

"Affectionately known as ‘The Six’ by locals, Toronto is an energizing, unique city with something for everyone, and Canopy Toronto Yorkville is no exception," said Shaileen Shah, the hotel’s general manager. "Canopy Toronto Yorkville creatively represents the city's rich culture through thoughtful design, a curated art collection, locally sourced cuisine and more. We're eager to welcome guests to our city and hotel."

Canopy Toronto Yorkville will participate in Hilton Honors, the award-winning guest-loyalty program for Hilton's world-class portfolio of 19 distinct hotel brands which boasts nearly 150 million members.

Canopy, lobby bar

Canopy, guest room

Canopy, public space

A Capital Idea

Catching up with the June Moteliers

By Jade Prévost-Manuel

We all love a good makeover—watching someone take something derelict and give it purpose again. Revamping the motels of yesteryear are the kinds of makeovers that April Brown and Sarah Sklash, the Canadian moteliers behind The June Motel brand, specialize in.

We’re familiar with their story as the subject of the six-episode, 2021 Netflix series "Motel Makeover", which follows their journey turning a crusty beach motel into The June Motel Sauble Beach, an upscale and intimate 24-room boutique resort. Today, Sklash and Brown operate two retro-inspired Ontario motels that they’ve renovated themselves, one in Sauble and the other in Prince Edward County.

High-end motels are a new phenomenon, with relatively few operating in Canada. But what does it take to make over an old property? Why bother rescuing the outdated town motel, and what are the opportunities for growth?

We are checking in with the ladies behind the June—exploring their successes and hearing about their plans for the future.

April Brown & Sarah Sklash

Q: Sarah, you and April visit a lot of properties looking for the perfect motel to become the next June. How do you know when you’ve found the right one?

SKLASH: I like to say “location, location, location.” April and I really had no connection to Sauble Beach before we bought into the area. But the motel that we saw listed, The Knight’s Inn, was a diamond in the rough. It had these characteristics from the late seventies and early eighties that were unique and interesting. It also had great bones. We’ve visited some properties that are just so dilapidated that you know it’s going to be a teardown situation. All in all, we like places that are interesting. We know that we're our guests’ home base while they're visiting an area, so we want to make sure there are great things for them to do around town. But also, we’re looking at our access to capital to purchase and renovate the property. That's often the starting point for us determining whether the project is right for us.

Q: How did you come up with the idea of developing a high-end motel?

BROWN: We developed the brand and experience with ourselves and our girlfriends in mind as the target audience. It was easy to think, “Okay, what would I want if I went on vacation? Or what is it that, when my friends go on vacation, they love about a place?” It’s always easier to design something around your own interests and passions, and I think that came through with The June in Prince Edward County. We started with this idea like, “Wouldn't it be cool to create an adult wine camp?” And the motel acted as a vehicle for that idea in many ways—real wine glasses in the room, a little wine lobby, pouring that glass of rosé when people arrive at the motel. In the beginning, it wasn’t necessarily about buying and renovating the motel. We just saw the opportunity for what this place could become. This had been done a lot in places, like Miami and California, but it hadn't really been done much in Canada, so we certainly saw the opportunity to bring that model here.

Q: What does an old motel cost? Has that changed since filming "Motel Makeover?"

BROWN: The pandemic had a huge impact on the cost of real estate in Ontario. Since we bought our first two motels, we've seen a big increase in cost. In Sauble, properties like ours are three to five times more expensive than they were in 2019 when we bought our motel. I think we’re starting to see more motels being renovated. People are seeing the opportunity there—maybe more so than in 2016 when we first purchased The Sportsman Motel in Prince Edward County.

SKLASH: We had previously said that when we bought The Sportsman in 2016, we bought it for the same price that our friends were buying homes for in Toronto. I think motels have gotten even more expensive than your average home in Toronto. But price depends on location. In 2016, Prince Edward County wasn't on that many people's radar. Now, it's a travel destination and motels there are going for at least five times the price that we purchased ours for.

Q: How long did it take you to buy, renovate, and launch your second June Motel? Would you have done anything differently?

BROWN: We’ve renovated both motels in a very, very short amount of time. Looking for our second motel, it almost took a year and a half for us to find the right property. We’re not looking to own 100 motels. For everything we buy, we have to hit that right place, right property, right number of rooms, right opportunity overall target. We've operated both motels as is for a first summer season, and I think that's also allowed us some time to kind of get into these motels and get to know them, get to know the destination as well, and shape our vision.

If we could do it differently, we would have been more realistic about our budgeting and sourced the appropriate financing needed upfront to save ourselves from more headaches later. At both properties, we were working with super tight budgets and had to make some tough decisions on where to make the investment. In many cases, we chose to invest in things

that would have the most impact on the guest experience. With that, there’s been some more foundational work that we’ve had to go back and do each year. It’s hard to manage this work when you’re in operational flow and it sometimes means closing the motel for a few weeks in the shoulder seasons.

Q: How much of your motels have you generally kept, versus gut?

SKLASH: Sometimes, we don't gut enough. We work with tight budgets, so we often emphasize the things that make it aesthetically The June and The June experience. Redoing the plumbing is a more long-term thing in our best interest to do. Bathrooms I'd say are the other thing that tend to need the investment. We try to keep the plumbing and light fixtures in the same places that they were, but a bathroom that was built in the seventies is not going to feel high-end.

BROWN: In the rooms, we haven't taken anything down to the studs, outside of the bathrooms. The walls are where the walls were originally. We love

paint, wallpaper, tile, and vinyl flooring. We add new primer and paint and fix up the walls, but we’re not doing new drywall or anything like that. And this goes back to why it's important for us to find a place with good bones because we're not interested in doing a massive, five-year renovation project. For us, it's very important that we can turn a motel around in a year.

Q: Are you on the hunt for new properties? How are you planning to grow?

SKLASH: For now, we’re looking to stay in Ontario for our next motel and add something that brings a new experience that The June can offer, whether that's a great year-round destination with some skiing or winter sports, we'll see. And again, just keeping our eyes open for that right property. We're also opening The June in Prince Edward County for weekends in winter for the first time this year…

BROWN: …and collaborating with other local businesses to help round out the winter guest experience. We’re also offering weddings in Sauble Beach

The June Motel rose suite.

Photo by Lauren Miller.

The June Motel classic room.

Photo by Lauren Miller.

The June Motel exterior.

Photo by Lauren Miller.

and leaning into The June becoming a destination for small corporate or leadership retreats. We’re really excited about the potential for more retreats at The June. We think that with so many companies going remote, there is more demand and budget for companies to bring their people together in engaging and meaningful ways. The June is perfect, because small companies or teams can take over the entire motel and curate a one-of-a-kind experience.

Q: Is there a capital plan for your assets? Where and how much would you spend?

BROWN: We’re currently in the midst of attempting to refinance both of our properties. We took on a number of COVID relief loans with shorter amortization periods, so we’re hoping this will improve our cash flow. We’re also tightening our spending and trying to be patient in terms of when we take on some of the planned capital expenditures at the existing properties. On the brighter side, we’ll be keeping our eyes open for opportunities that may open up for us to continue to grow The June while being conservative as

we analyze the feasibility. We did a complete renovation of the balconies in Prince Edward County in 2022, and at Sauble Beach, we’ve already started on the landscaping of a large patio space off the backside of the lobby bar that will have three campfires and an outdoor bar. We’ve also added smart locks to all the rooms. The patio and smart locks were 50 per cent funded by the Tourism Relief Fund, an initiative from the Canadian Government to support projects that will encourage tourism in fall/winter seasons.

Having recently completed a thorough renovation of The June Motel in Sauble Beach, we are finally in a place where minimal CapEx should be required for the next few years. The June Motel in Prince Edward County, however, we plan to continue reinvesting over the next several years. We have an acre of undeveloped land behind the motel that we have big dreams for…additional rooms or cabins, adding more food and beverage in a fun and casual way, and more parking. We’re still in the “dreaming” phase, but we know it’s likely going to be a $1 million or more investment to turn these dreams into a reality.

Q: Why bother, in your opinion, reviving an old motel or hotel, versus building something new from the ground up?

SKLASH: Two things come to mind. Environmentally, it's the best way to create a place today as opposed to building something from scratch. And second, they have so much character, and I think that's what travellers are looking for now. They're not looking for cookie-cutter experiences, they're looking for something authentic, something with character that's different from every other place that they've stayed. And by taking over an older place, that’s just built right into the experience.

This interview has been edited and condensed.

The June Motel exterior.

Photo by Lauren Miller.

The June Motel rose suite.

Photo by Lauren Miller.

Heydeys, Sauble Beach. Supplied photo.

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ARCHITECTURE & DESIGN

DECONSTRUCTING LOOK OF W TORONTO

BASED ON THEMES DERIVED FROM THE CITY'S CURRENT AND HISTORICAL HERITAGE, the fresh look of W Toronto, designed by Sid Lee Architecture, reflects the banner's desire to assert itself as a showcase for local culture. The new spaces echo the diversity of the urban centre and aim to build and maintain a real connection to the streets of Toronto.

“Connection to the community being an important part of W’s DNA, it was vital to connect the hotel to its context, but the original closed-off layout of the building represented an integration challenge,” says Martin Leblanc, architect and principal partner at Sid Lee Architecture. "Our team relied on a seamless connection between the interior and the exterior to turn the hotel into a connectivity hub." That idea was deployed namely around the addition of an elevator accessible directly from

On the ground floor, the facade opens onto the street and allows for direct engagement through Public School: the hotel’s café by day, and cocktail bar by night. The action is set around a casual circular bar adorned by notched black marble panels that fit the context of the designer stores of Bloor Street while remaining approachable and inviting, chic and accessible.

The redesign of the entrance is designed to invite the street inside through the integration of a series of art installations inspired by Toronto's own street art culture. The murals, signed by local artist Alan Ganev, pay homage to "Graffiti Alley," a street art circuit stretching over a kilometre in Toronto’s Fashion District.

With notes from Sid Lee Architecture

Architecture & Design

Vibrant scenography

The design sets the tone for a cinematic entrance on the Toronto scene as the curtain rises on an updated hotel experience. The designers used the building's brutalist quality as a neutral canvas and accentuated the different spaces with vibrant theatrical scenery. Elements of biophilic design have been integrated with the minerality of concrete, as if nature had taken over the vestiges of the built environment, allowing for a constant connection to nature and giving a nod to Toronto's ravines, which collectively form an urban forest surrounding the city.

Located on the second floor, the reception area, also referred to as The Living Room (a W brand signature space), is housed in a glass cube. It is an urban oasis that allows visitors and guests to feel detached from the rest of the city while being surrounded by local references. Its contrasting accents offer a comfort that is amplified by the arrival of snow in winter. Inside The Living Room, suspended grids, velvet curtains, and lighting that resembles movie projectors give the impression of being backstage. The palette and textures are paired with prop-like furniture and art pieces. This is a tribute to Toronto’s theatre and film scenes.

A series of strategically-placed gigantic tubes divide the area without breaking up the natural flow of the space. A conversation pit set around a bond fire plays with socializing archetypes, while a horizontal mural designed on the roof by artist Kirsten McCrea offers a lively view of the surrounding rooms.

Architecture & Design

Guestrooms

Located around the gardens that surround The Living Room’s glass cube, the guestrooms at the W Toronto are surprising due to their unique layout. The space is composed of two distinct areas: one private and the other social. In a departure from the usual hotel room configuration, the bed is placed in front of the window and adorned with warm drapery, pendant lighting, and a deep blue frame that extends across the floor and walls. “This innovative new layout also allows for extra living space within each unit,” adds Leblanc.

SKYLIGHT Rooftop Bar and Restaurant

Accessible by an elevator located on the street, the rooftop bar and restaurant is inspired by the city’s multiculturalism, but also by the hippie culture of Toronto’s Yorkville neighbourhood; with Mashrabiya (an architectural element which is characteristic of traditional architecture in the Islamic world and beyond, according to Wikipedia) type perforated screens, hanging plants, colourful ceramics, and earthen tones aim to create a relaxed atmosphere that summons the warmth of the desert.

Suites

The Extreme WOW suites exemplify the film and theatre motif. Rows of light bulbs adorn the ceiling as an ode to the marquees of Toronto. With a hot tub that can also be used as an ice bucket, luxurious details and retro-futuristic accents, the suites offer spacious living areas designed to entertain the most exclusive and glamorous of parties.

TECHNICAL SHEET

Location: 90 Bloor Street East, Toronto, Ontario Canada

Client: Larco Hospitality

Architects: architects-Alliance

Interior design: Sid Lee Architecture

Area: ± 190 000 sq. ft.

Capacity: 254 rooms

General contractor: Bird Construction

Electromechanical engineers: Smith + Andersen

Structural engineers: RJC Ingénierie

Photographer: Brandon Barré

THE NEW INTERNATIONAL ECONOMIC ORDER STUMBLED ONCE BEFORE. WILL IT SUCCEED A SECOND TIME AROUND?

Adam Sneyd Associate Professor, Political Science, University of Guelph

CALLS FOR A NEW APPROACH to the management of global affairs intensified after the curtain came down on this year’s World Economic Forum (WEF) annual meeting held at Davos, Switzerland.

In the wake of the WEF’s headline-grabbing controversies about the legitimacy of WEF’s leadership and proposals for a new global economy, a movement seeking to renew the promise of global co-operation quietly re-emerged. Delegates from over 25 countries, organized by a group called Progressive International, assembled in Havana on Jan. 27 to declare their intent to build a New International Economic Order (NIEO) fit for the 21st century.

The Havana signatories are mobilizing around Cuba’s presidency of the Group of 77 at the United Nations (UN). They aim to use Cuba’s platform to revive discussions about a NIEO in the General Assembly. This diverse group of researchers, government officials and activists intend to develop a new political vision for managing the world economy, in the face of several global crises, over the next 16 months.

They hope to enshrine their vision in a UN Declaration next year that would coincide with the 50th anniversary of the General Assembly’s adoption of the Declaration on the Establishment of a New International Economic Order.

The NIEO’s signatories seek to rebuild the collective power of emerging and developing countries within and beyond the UN system. They also support the creation of new governance institutions that would fundamentally transform the international system. In doing so, they are committed to proposing alternative ways to respond to international crises.

While this attempt to revamp global partnerships appears to be promising, at a time of overlapping global emergencies, the pitfalls are numerous.

The birth of the NIEO

The NIEO emerged in 1973 as the collective project of developing countries to transform the United Nations system. Its adherents were convinced that the international community’s

insufficient response to several interlinked crises was undermining their interests.

In 1971, the unilateral U.S. decision to abandon the convertibility of U.S. dollars into gold left many countries with devalued dollars.

To navigate this inflationary context, and respond to U.S. policy during the 1973 Yom Kippur War, members of the Organization of the Petroleum Exporting Countries placed an embargo on oil exports to the U.S.

The ensuing oil price increase compounded an ongoing food security crisis and undercut the ambitious goals of the second UN Development Decade. Moreover, the ongoing threat of nuclear conflict, and an emerging awareness of unaddressed environmental challenges, heightened popular malaise about the adequacy of international institutions.

In the wake of these crises, the NIEO was formed. Building on the ambitious development agenda of leaders across the Global South, it included a comprehensive package of reform proposals.

Its Programme of Action sought to help countries exercise more control over their own natural resources. The NIEO package recognized that many developing countries had been structured by colonizers to export raw materials and its backers sought to remedy this condition.

Its advocates also pushed for new institutions to govern commodities and transnational corporations, and worked to speed up the transfer of technologies that would facilitate industrialization and end commodity dependence.

The NIEO’s stumbling block

After the General Assembly adopted the NIEO, efforts to implement the full package failed to gain traction. While the U.S. initially recognized some of the underlying challenges, it advocated an issue-by-issue approach to engaging with the action program.

Negotiation processes on individual components of the NIEO subsequently multiplied. This fragmentation taxed the capacity

of developing countries and contributed to undermining

Soon after, opinions on the program’s components polarized, and dialogue reached a contentious impasse. An independent commission was then struck to resolve the conflict that had emerged between the Global North and the Global South

By the early 1980s, as interest rates rose and a global debt crisis loomed, some of the NIEO’s biggest champions had died or

The initiative ebbed after U.S. President Ronald Reagan declared an end to the search for new international institutions in his address to delegates at the International Meeting on Cooperation and Development held in Cancun on Oct. 22, 1981.

And now, fifty years later, we are facing yet another set of intersecting crises with woefully inadequate global responses.

Ongoing global challenges, including the public health crisis, global food insecurity, geopolitical conflicts and the climate emergency, are once again outstripping the response capacity of the UN.

Back to the future?

The NIEO’s faltering trajectory offers several lessons that must not be forgotten as pressure to renovate global institutions intensifies.

For starters, any proposed renewal of the NIEO must recognize that the original effort went off the rails after the full package was broken up. A case can be made that more substantive results could have been achieved had the program proceeded as an indivisible single undertaking.

The NIEO also served as a rallying cry that enabled numerous despots and authoritarians to sound like change-makers on the global stage, even as they repressed their people and looted state coffers. Today’s reformers must achieve a better balance

politics, we should watch this space.

between talking the talk at global gatherings and walking the walk for their people.

Moreover, the NIEO never seriously engaged with concerns about the environment. Countries that depend on commodity exports have an interest in taking arguments about the need to downscale humanity’s material footprint seriously. They must think creatively about possible futures that discard the unsustainable pursuit of infinite growth, and act boldly to end the climate emergency.

As the chorus of voices challenging the global governance status quo swells, a NIEO revival will make a difference if it moves beyond nostalgia.

While the ideological conflicts that plagued the initial drive for a new order could easily undermine the current effort, the fact that idealists and realists are uniting to build genuine paths to a world beyond the WEF is refreshing. Whatever our individual

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The Atlas Hotel

Regina, Saskatchewan

By Jim Byers

Q: Tell me a bit about your hotel. I’m told there were some big changes.

A: I’m a second-generation owner. My Dad and his partners bought the hotel in 1982. It was the Vagabond Motor Inn. My Dad and his partners turned it into a Travelodge for about 37 years. I took over from my Dad in 2008 or so. I ran it as a Travelodge for several years. But I saw what other cities were doing with boutique hotels and independent hotels. As our industry became more consolidated I saw an opportunity to go the other way and be more individualized. So that’s where we created the Atlas Hotel brand. It’s a single hotel, independently branded, named after my love of maps and travel. We tried to get away from what everybody else was doing. We had embarked on different promotions but as a Travelodge, as you can imagine every effort just kind of got washed

away by the larger brand. I have my own sales and marketing department, and I was individually doing all the things the brand is supposed to do for you.

In 2019 we branded as the Atlas, and it was probably the best business decision we ever made. We went away from traditional chandeliers and other things to change the look and feel of the place. I cranked up the music in the lobby and created our own playlist. We stopped wearing suits and moved to sport coats. We wanted a more modern, contemporary feeling; a different vibe. We also went really hard on social media in terms of having a brand people might love; a little fun, a little cheeky. There’s a thing we did as an experiment. We had done a hallway renovation, and everything was done except for the carpets. We had these old, brown, ugly carpets. The temptation was to say ‘Please excuse

our renovations, we’re not finished.’ But instead, we put up cheeky signs, like ‘Go ahead, spill your coffee,’ or ‘Please look at our nice, new lights; don’t look at the carpets.’ We didn’t put the signs at eye level. Some were down near the floor, some were on the ceiling. The magic moment came when a big customer from Toronto, the kind of guy I was worried about, got home and sent me a text and a photo and said, “This is awesome.”

Q: When did things start to get back to normal out of the pandemic?

A: I would say the biggest catalyst for reopening for us was at the end of February 2022, a year ago, but in Saskatchewan, we didn’t have to wear masks anymore. Maybe that’s when you didn’t have to fill out your ArriveCAN form anymore, or maybe it was a change in the vaccination rules. I’m not

At STAY Magazine, we are taking Canada’s temperature. We’re asking hotel managers across the country how things are going for them and what it’s like in their region. We chatted with Ryan Urzada, “chief experience officer” at the Atlas Hotel in Regina.

Ryan Urzada

sure. By April we were probably back to 80 per cent of our normal business, with the exception of meetings and conferences. That didn’t start to come back until September. We had corporate travel, contractors, construction folks, tournaments started to come back in a big way. Leisure travel had always been there. We had a record summer for weddings in 2022. The other thing that didn’t come back and hasn’t fully come back is government travel. Lots of people are still working from home. But meetings and conferences came back last fall with a vengeance. We probably had our best September in 10 years.

Q: Where would you say you are now compared to 2019?

A: I’d hesitate to say record-breaking, but we’re having some of the best months we’ve had in five or ten years. It’s such a relief. You hang on for so long and you keep telling your staff that

you’re going to get through this, and then there are so many stops and starts in those two years. We’d say, ‘I think this is it, only to fall back into it.’ We watched other industries have their post-COVID surge. We knew it would come, but we were the first to be hit and the last to come out of it.

Q: Is staffing an issue in Regina?

A: Yes, our two biggest issues are inflationary pricing, all of our costs went through the roof, and staffing. You pay more for staff. The single biggest expense for any hotel is always your labour. You always hear people say things like “The cost of having turnover of staff is one year’s salary.” I’m not sure I believed that. I’m not sure I appreciated how costly it is to an organization to deal with that on a regular basis. It’s something I’ve really learned in the last eight months. It’s very expensive, between retraining,

mistakes, morale; team morale you have to build up or protect. It’s challenging.

Q: Did you have to raise prices?

A: Everything has gone up; food, drink, room prices. There’s a time when you sort of watch closely what your competitors are doing. You don’t want to get too high as they undercut you and take away your business. But I would suggest by this summer and the fall it didn’t matter. I didn’t care what my competitors were doing, I had to charge more to survive. There’s no way what we were doing was sustainable. My payroll is a good 20 per cent higher and I have a record number of people on staff. Normally I’d have 130 people on staff. I think we have 180 now. There are lots of casual and part-time people. (We’re) adding two people where I’d have one experienced person before.”

Q: What’s your take on the coming year?

A: We’re expecting a similarly strong year to what we had starting in the spring of last year. I think we’ll repeat that. December and January are typically our quietest months and to some extent February. But they’ll be strong, stronger than 2019 and 2018. The short-term forecast is that spring will be very busy; tons of sporting events, contractors coming to Regina for various reasons. I expect the summer to be very strong as well, with lots of weddings. I don’t see a slowdown right now, but one thing the pandemic taught me is that things can

time for the positive stuff to come back, but the negative stuff can happen and shut you down pretty quickly. But I’d say the rest of the year looks pretty solid.

Q: How are things in Saskatchewan generally?

A: I would speculate that a lot of hotels are in the same boat as I am. I think downtown hotels have perhaps not seen the same resurgence a hotel like mine would. We’re a very balanced hotel. We do well on weekends with the water park and weddings, and we’re solid on weekdays with corporate meetings and conferences. Downtown hotels often struggle on a weekend and

could be. Large-scale corporate travel, the bankers, the government people flying from Ottawa, or the corporate person flying from Toronto to Vancouver and paying $250 a night … I don’t know about that. I haven’t stopped flying during the pandemic, and I’ll tell you right now it’s more frustrating to hop on a plane today than it was during the worst part of the pandemic. If you can fly to Regina or do another Zoom call and stay put, I think that’s part of the business that hasn’t fully recovered.

The interview has been edited for space purposes.

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INDIGENOUS TOURISM: AN ECONOMIC OUTLOOK

By Tamara Littlelight

Sales & travel trade manager

Indigenous Tourism Association of Canada

INDIGENOUS PEOPLES IN CANADA ARE USING TOURISM TO REDISCOVER AND SHARE THEIR CULTURE WITH THE WORLD. Businesses like Klahoose Wilderness Resort provide experiences that reflect the Klahoose traditional values and offer an immersive exploration of British Columbia’s pristine region.

Over the last few years, Indigenous tourism has quickly expanded and has helped propel several Indigenous businesses. This has included Indigenous-owned accommodations and Indigenous-led experiences to Indigenous-owned and operated restaurants. In fact, before COVID-19, Indigenous tourism was the fasted growing industry. According to research by the Conference Board of Canada, Indigenous tourism experiences satisfy the growing consumer desire to seek authentic stories of diversity and products offered by diverse groups.

With the future of Indigenous businesses in mind, the Indigenous Tourism Association of Canada (ITAC) offers several programs to support Indigenous communities: The Original Original Accreditation program, 2022-23 Business Support Program, Northern WE in Tourism and The Tourism Entrepreneur Accelerator Program.

Trade associations, international tour operators, travel agents, Destination Canada, destination marketing organizations (DMOs) and local communities rely on The Original Original Accreditation program as it helps promote authenticity and a quality tourism experience while giving access to lucrative travel trade networks and new visitor/consumer markets.

Indigenous Initiatives

ITAC’s 2022-23 Business Support Program helps Indigenous tourism operators in Canada meet market readiness standards. Market readiness evolves differently for each business and is dependent on the availability of resources, cash flow and market conditions. Below are three types of market readiness for Indigenous tourism businesses:

1. Business Ready

2. Visitor Ready

3. Export Ready

Indigenous women entrepreneurs also receive support from ITAC and their partnership with allied researchers. Any information gathered through Northern WE in Tourism study will increase collaboration between women entrepreneurs in the north to identify pathways to sustainable livelihoods.

The Tourism Entrepreneur Accelerator Program is a collaboration between Firecircle, ITAC and the Government of Canada. Firecircle focuses on addressing the gap in the market and export-ready tourism businesses and provides sustained tourism development mentorship for rural, Northern and Indigenous entrepreneurs across Canada. This program helps Indigenous entrepreneurs create innovative and simple business plans while receiving the support they need.

Indigenous Initiatives

It’s clear Indigenous tourism plays a significant role in helping sustain businesses within the community and while COVID-19 put a pause on its growth, today the Indigenous tourism industry is on track to recover to pre-pandemic levels. Below are a few examples of Indigenous businesses making a mark in the tourism industry by providing experiences that are genuine and authentic.

1. Klahoose Wilderness Resort tours opened in 2021 and are primarily led by Klahoose guides who are trained to share legends, stories, language, and songs. Owned by the Klahoose First Nation, Klahoose Wilderness Resort is an all-inclusive eco-resort in British Columbia providing accommodations with spectacular views to its guests. The resort offers immersive experiences including an eco-adventure boat tour, a grizzly bear viewing tour, marine and terrestrial wildlife viewing, guided Indigenous storytelling, sea kayaking, rainforest nature walks and hikes, just to name a few.

2. Nemiah Valley Lodge is an Indigenous wilderness escape. The lodge sits in the heart of the traditional territory of the Xeni Gwet’in First Nation in the beautiful Nemiah Valley. It is Indigenous-owned and operated by the Xeni Gwet’in First Nation. Visitors explore through immersive experiences, like learning how to drum, dance and sing Tsilhqot’in, a traditional cleansing ceremony; kayak on Chilko Lake, taking a hike to visit unique columnar basalt formations; or meet with a Xeni Gwet’in Knowledge Keeper who will share one of their traditional skills.

3. Hotel-Musée Premières Nations is a 4-star boutique hotel with architecture inspired by longhouses surrounded by thematic gardens and hiking trails. Guests can enjoy a spa day with treatments in the outdoor Nordic baths and end their day with an evening with traditional stories inside the longhouse or visit Musée Huron-Wendat to learn more about Indigenous culture and take part in traditional workshops.

4. Métis Crossing is a 40-room boutique lodge on the banks of the North Saskatchewan River where visitors can discover the rich history of the Métis People in Smoky Lake, Alberta. It is Alberta’s first major Métis cultural interpretive destination that sits on 688 acres of land, comprised of river lot titles from the original Métis settlers to the region in the late 1800s. The crossing is designed to engage and excite visitors through an exploration of Métis cultural experiences from a variety of traditional workshops providing interactive, hands-on experiences to self-guided experiences giving visitors t time to explore historical exhibits like the Métis Farmyard. For visitors looking for an outdoor experience, Métis Crossing also offers sky-watching domes and camping.

To learn more, visit destinationindigenous.ca

CRYPTOCURRENCIES ARE IN CRISIS, BUT THEY ARE NOT GOING TO DISAPPEAR

Annie Lecompte Assistant prof - Audit, Université du Québec à Montréal (UQAM)

Cryptocurrencies are experiencing their worst crisis since the arrival of the first crypto assets and virtual currencies in the 1990s and their democratization in the 2010s.

Bitcoin had an unprecedented tumble in late 2020 and has yet to recover. In addition to this sharp decline, there is much discussion about the worrisome collapse of some so-called stablecoins, which are supposed to be less volatile.

This is compounded by the fall of cryptocurrency giants, particularly due to allegations of fraud in cases like the FTX scandal. At its peak, FTX had one million users and was the third-largest cryptocurrency exchange in terms of volume.

Experts agree that the aftershocks of its collapse have hit investors hard and will likely slow the pace of crypto asset adoption for the next few years.

As an expert in the field of cryptocurrencies, I will try to answer the following question: are cryptocurrencies really here to stay, or are they just a fad?

SPECULATION AND EXTREME VOLATILITY

Crypto assets include tokens that can be used for digital currency purposes (i.e. cryptocurrencies such as Bitcoin and Ethereum). They are also used for investment in an entity (a “security token,” which entitles the holder to ownership of a portion of an entity), or for products or services (a “utility token,” which entitles the holder to a product once it has been produced, for example).

Stablecoins, which are supposed to be associated with lower volatility, are unique in that they are backed by a currency (e.g., the U.S. dollar), a commodity (e.g. gold) or a financial instrument (e.g. a stock or a bond). This is to keep the value of the digital currency stable.

Bitcoin’s plunge is followed in the headlines on a daily basis. While this is not the first time it has fallen, it is particularly noteworthy as it is the biggest drop in value since late 2020. The collapse is partly due to rising interest rates and the flight of investors from these risky investments. Although it is recovering, Bitcoin is still a long way from the heights it once reached.

This media coverage raises many questions about the sustainability of these crypto assets. Indeed, the latter are marked by extreme volatility in their unregulated markets in addition to being associated with speculation by many players in the financial world.

Indeed, the BBC recently reported that cryptocurrency laundering rose 30 per cent in 2021. The U.S. Federal Trade Commission, which aims to protect U.S. consumers, reported that in 2021, fraud schemes cost investors more than $1 billion in cryptocurrencies. Needless to say, very few of the defrauded investors have recovered their money.

ONE BILLION USERS BY 2022

Yet we are seeing a slow but sure increase in the adoption of cryptocurrencies by companies. In an ongoing study of the impact of cryptocurrency adoption by public companies on their social responsibility, I noted that many of them, such as Starbucks and McDonald’s, have started to accept Bitcoin as a form of payment. This is particularly the case in their branches in El Salvador, following that country’s adoption of Bitcoin as legal tender.

Others, such as Japanese online retail giant Rakuten, have chosen to accept cryptocurrencies even if their country is not pushing to adopt Bitcoin as a currency. They say they are driven by a desire to offer more payment options to their customers.

The user base for cryptocurrencies is growing year on year. For example, Crypto.com, an exchange platform, estimated that about 295 million people had entered the cryptocurrency market as of December 2021. The platform expected the number of users to cross the one billion mark by December 2022.

Cryptocurrencies also allow people with unreliable or insecure banking systems to access a parallel banking system that is independent of the traditional banking system. Offering a less affluent part of the population access to a different form of banking system is one of the reasons the president of El Salvador gave for making Bitcoin legal tender in the country.

A HEALTHY FLUCTUATION

The growing interest in decentralized finance (DeFi), as well as the development of the Metaverse, are also factors that influence the sustainability of cryptocurrencies. Decentralized finance often relies on stablecoins for its operation. Meanwhile,

the Metaverse, a universe of 3D virtual worlds, also allows the use of cryptocurrencies to purchase goods or services, creating an immersive world.

Experts in the sector believe that, despite the debacle that the crypto asset market has experienced recently, decentralized finance—particularly via products backed by crypto assets—is here to stay. This is because there is a market and players willing to participate.

Moreover, they argue that while this sharp decline in cryptocurrency-related markets does remove some players, this is a welcome change. By the admission of Raoul Ullens, co-founder of Brussels Blockchain Week (an annual conference devoted to blockchain and cryptocurrencies):

“It is healthy, for the adoption, the maturation of these Web3 technologies, to skim, to rebalance the sector. […] An unhealthy ecosystem will not attract the masses.”

According to these players, such a drop in the crypto asset markets is not only necessary but also healthy, contributing as it does to rebalancing the valuation of cryptocurrencies.

CRYPTOCURRENCIES ARE HERE TO STAY

The launch of cryptocurrencies by central banks, via central bank digital currencies (CBDCs), also lends weight to the argument that crypto assets are here to stay. Indeed, the Bank

of Canada is currently working on the creation of a CBDC. According to the institution, a CBDC issued by the Bank of Canada would be an “official digital currency (that) would retain its face value in Canadian dollars because it is issued by the Bank of Canada, just like bank notes.”

Other nations in the world have already issued such a currency, including the Bahamas (Sand Dollar) and Nigeria (eNaira). One reason CBDCs are different from privately issued digital currencies (such as Bitcoin or Ethereum) is that their intended use is for transaction purposes only, not for investment or speculation. They offer the same possibilities of use as cash.

CBDCs also aim to promote the financial inclusion of a part of the population that has little or no access to the traditional banking system, and to simplify the implementation of monetary and fiscal policy in the issuing countries.

Developments in the world of digital currencies, whether in the Metaverse or with the arrival of the CBDC, and the craze that they continue to generate, mean cryptocurrency is here to stay.

This durability means the form of crypto assets take will continue to evolve and transform with the technologies that support them (notably, blockchains) and the variation in demand from users and/or investors.

This article was originally published in The Conversation.

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