STAY Magazine Vol. 3 Issue 3

F&BPlaying chicken in the Ritz-Carlton's kitchen

EMERGENCY PREPAREDNESS

Climate change: Adding fuel to the fire

Canadian airlines brace for a summer of change as U.S. airlines consider reforms

DOMINICA, a tale of two resorts

As we fight the Alberta and B.C.wildfires, we must also plan for future disasters

CBRE Hotels Canada Market Update

May /June 2023

Volume 3 Issue 3

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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

Jade Prévost-Manuel, Jim Byers, Jonathan Eaton, John Gradek, CBRE Hotels Valuation & Advisory Services

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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

Ace Hotel Toronto Toronto, Ont.

Photographer: Scott Norsworthy

Source: “Ace Hotel Toronto / Shim-Sutcliffe Architects 10 May 2023.

Canadian hotels and destinations are on the map…

AS WE HEAD INTO THE SUMMER OF 2023, STORIES COMING OUT OF THE SECTOR ARE ALL ABOUT CANADIAN HOTELS OUTPERFORMING EXPECTATIONS, as well as tales about our great nation as a bonafide destination for domestic and international travellers alike.

Business travel is still taking its time returning to pre-pandemic levels, but things are moving in the right direction according to our intelligence expert for this issue—Nicole Nguyen of CBRE Hotels, while most other indicators in the sector are pointing to tremendous success in 2023.

Putting Canada on the map is our cover hotel—Ace Hotel Toronto—coming in at number 25 on Travel + Leisure’s “100 Best New Hotels in the World” list, meanwhile, Toronto, Vancouver, and Montreal were named among the best cities in the world for their global familiarity by Brand Finance, a UK-based consultancy firm.

Advocacy work carried out by the Hotel Association of Canada continues—Susie Grynol, president of HAC testified in May at the House of Commons Finance Committee on the government’s tourism investments in Bill C-47 (the Budget Bill), keeping Canadian hotel and tourism sector businesses front and centre in Ottawa.

In this issue we tell your stories—from independent hotel managers to Canadian resort owners living and operating abroad. And while much of the country is gearing up for the summer season and enjoying a business boon, there are owners, operators, travellers and residents across parts of Canada facing nature’s fury with wildfires threatening communities and businesses—we have spoken to some of those affected by the wildfires and other natural disasters, as well as insurance, climate change and emergency preparedness experts sharing important anecdotes as well as sage advice.

Thank you for reading our latest issue of STAY Magazine. As always, we welcome your comments, questions and contributions as we continue to bring you the best of Canadian hotel intelligence.

Stacey Newman Editor-in-Chief

PLAYING CHICKEN IN THE HOTEL KITCHEN

By Jim Byers

Dredging up some prize nuggets with Paul Shewchuk, executive chef, The Ritz-Carlton, Toronto

HE’S A TOP CHEF THAT HAS WORKED WITH SOME OF THE BIGGEST NAMES IN NORTH AMERICAN COOKING. He’s put his own touches on fancy, $100 dishes served up in some of the finest hotels in Canada and the United States.

But Chef Paul Shewchuk doesn’t get noticed by the average Joe until a major league ballplayer posts a blog saying the man makes amazing chicken tenders.

“I honestly don’t know how this happened,” Shewchuk says as he chats with a journalist at the posh The Ritz-Carlton, Toronto, where he carries the title of executive chef. “This blog went up in 2018 or 2019 and four years later it becomes a big thing.”

It all began in 2019 when now Toronto Blue Jays’ Brandon Belt posted an item on the blog site of the San Francisco Giants baseball team, the team he was playing for at the time. The Giants had recently played in Toronto, and they had stayed at the Ritz-Carlton. Belt’s blog post talked about life on the road as a professional athlete.

“I can’t leave you today without sharing one of the highlights of the trip to Toronto,” Belt wrote. “What most baseball players look for on the road is a hotel that has good room service late at night,” Belt wrote. “When I get to the hotel at 11 or 12 after a game or a flight, I can get good chicken tenders and a slice of good apple pie or chocolate cake with it.

“I’m pumped. I get my ketchup and my ranch, and I dip the tenders—ketchup first, then ranch. Then lots of black pepper on the fries.

“The Ritz-Carlton in Toronto had the best chicken tenders I’ve ever had in my life. Just the right amount of crisp and super tender. I had a homer and a double in that two-game series, and I think it was the tenders.”

The tender-loving blog post laid idle for four years (kinda sorta like Gollum’s gold ring in The Lord of the Rings), but then Belt signed with the Blue Jays in January of this year. Some intrepid reporter, who will no doubt go down in the annals of culinary chicken history, uncovered Belt’s blog post.

Shewchuk, who’s from Southern Ontario and has worked at such prime dining spots as Langdon Hall in Cambridge, Ont. and the Fairmont Pacific Rim in Vancouver, shrugs off the poultry praise.

“We all love our comfort foods. When I leave work there’s nothing I want more than a pizza or a burger.

“There’s that little kid inside all of us.”

Shewchuk said some of his chef compatriots have teased him about the tender publicity.

“I just say, Hey, you have to be famous for something.” But he’s deadly serious about his cooking, and for Shewchuk, that means he has to pay attention to every dish that’s served at the Ritz-Carlton.

“If I cook a chicken finger very well it’s just as important as making a bouillabaisse very well.”

Shewchuk, who went on the Tim and Friends TV show to display his tender wares, uses slices of chicken breast for his menu. Not for him those flaky bits of meat you might find pressed together and labelled as “chicken nuggets” at some fast-food outlets.

Still, he says it’s all about “the dredge,” and not the chicken. He marinates his poultry for 24 to 48 hours in buttermilk, black pepper, Dijon mustard, and a bit of cayenne. Perhaps some other spices, but I didn’t think he wanted to give up any tender secrets.

He then uses an egg wash and dips the chicken in flour and bread crumbs.

But the real secret? Deep frying.

“I know people like to watch their waistline but there’s no better way to do it than deep frying. They get nice and crispy.”

My recent serving at the Ritz-Carlton, where they were kind enough to buy me lunch, came with four crispy-coated tenders that I thoroughly enjoyed. I also had a mound of lovely fries and dipping sauces: ketchup, plum sauce and a mix of homemade barbeque sauce topped with homemade, vinegary mustard. With all due respect to the Blue Jays’ new slugger, barbeque sauce and mustard hit ketchup and ranch dressing outta the park.

The tenders and fries are listed for $25 on the hotel’s in-room dining menu. They also have salads, poke bowls and grilled striploins for those super-hungry ballplayers, as well as Indian dishes.

Shewchuk says he hasn’t met his biggest fan and hasn’t been offered any Blue Jays ticket yet. But Belt is pulling down $9.3 million a year, so you would hope his favourite chef might get to see a ballgame or two. (He likes to see the Jays in the playoffs, but admitted he’s more of a hockey fan than baseball.)

Shewchuk grew up in Kitchener and said his parents would take him to the legendary St. Jacob’s market on weekends at 6 a.m.

“We made everything from scratch at home. We had two pear trees, two plum, [and] an apple tree. We were always canning. My grandpa had chickens and carrier pigeons, too.”

He went to university to study mechanical engineering, but quickly realized he was in the wrong discipline.

“But I do like building and creating things.”

Shewchuk started his culinary journey with studies at Humber College. He then began his impressive career studying under Chef Michael Stadtländer, the father of Canada’s influential farm-to-table culinary movement. He gained a placement at the famed Eigensinn Farm, where he further developed his passion for sustainability and quality ingredients.

Shewchuk then joined the AAA Five Diamond Langdon Hall Country House Hotel & Spa in Cambridge, Ont. under the

tutelage of renowned Chef Jonathan Gushue, as restaurant chef de partie. From there he migrated to the west coast, taking leadership roles in smaller restaurants and resorts before beginning an eight-year tenure with Fairmont Hotels & Resorts. Developing from restaurant chef at The Fairmont Jasper Park Lodge to executive chef at the Fairmont Olympic Hotel, Seattle.

“Jonathan (Gushue) taught me how to really taste food,” he said. “He has an amazing palate, but he keeps things simple. That’s when I started to understand food.”

I did my tenders-tasting at the recently renovated EPOCH Bar & Kitchen Terrace, a gastro-bar on the main floor of The Ritz-Carlton, Toronto. It looks spectacular, with massive blackand-white photographs from Caitlin Cronenberg (daughter of director David Cronenberg) that have had bits of colourful paint added to them by Toronto artist Heidi Conrod.

The menu is meant to embrace Toronto’s multicultural identity, as well as the wildly popular Toronto International Film Festival. For example, you’ll find Norwegian salmon that’s slightly cured, so it’s not quite sashimi, as well as Spanish fried chicken. Cocktails include the “Cinema Verite” and “Gentlemen Prefer Blondes”, which features Pineapple & Pomegranate infused CÎROC Vodka, St-Germain, Passion Fruit & Rose Hips, Fresh Lemon, Prosecco, Red Wine Reduction, Lavender & Blue Tea infused Tanqueray Gin, Fino Sherry, Honey, Fresh Lemon and Prosecco. Phew.

EPOCH Bar & Kitchen Terrace also serves an elegant afternoon tea that’s very popular.

I was told the outstanding Italian restaurant on the second floor, TOCA, has a bit more of a trattoria-like menu these days. Menu items include porchetta, Chilean Sea Bass and Steak Fiorentina. One dish that sounds amazing is the house-made pasta carbonara that’s tossed in a DOP Parmigiano-Reggiano Wheel. Wowza.

EPOCH offers master classes in mixology, as well as grilling and pizza oven classes on their fine, extensive patio when the weather’s good. TOCA offers master classes in pasta making (I took one a few years ago and had a great time), as well as in wine and cheese. The TOCA cheese cave is a wonder of its own.

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DOMINICA, International

a tale of two resorts

By Jim Byers

TWO RESORTS, TUCKED AWAY

IN A CORNER OF A CARIBBEAN ISLAND FEW PEOPLE SEEM TO KNOW MUCH ABOUT. Two high-end properties that stress sustainability and giving back. And both are run by Canadians.

Former Calgarian Laura Ell runs Jungle Bay Resort, a stylish yet casual property on a hill overlooking Scotts Head, a skinny peninsula that juts out into the Caribbean in the southwest corner of the island.

Only a few minutes away is Coulibri Ridge, a sustainable, off-the-grid, uberluxury hotel managed and built by a pair of Montrealers; Daniel Langlois and his wife, Dominique Marchand.

Coulibri Ridge is nothing short of sensational, not to mention sustainable. It was recently named one of the

top 15 new hotels in the world by AFAR magazine.

This STAY Magazine correspondent didn’t get to stay the night but had a tour when he was on the island in January of this year.

The resort has 14 off-the-grid suites and uses wind and solar power. They also collect and harvest rainwater.

Langlois is a story in and of himself. As a young university student in Montreal, he developed software he thought was pretty cool and managed to get it in front of none other than Steven Spielberg. Langlois said Spielberg was shooting the first Jurassic Park, but was going to use old technology. Langlois was able to show the renowned director that his 3D animation software could make the dinosaurs move more naturally on the screen.

The way Langlois tells the story, Spielberg quickly rewrote the script, and the rest is history. Langlois later sold his company, Softimage, to Bill Gates for some US $130M.

Langlois has had his software used in some of the biggest Hollywood blockbusters since then, including Harry Potter and The Lord of the Rings. He’s also an Officer of the Order of Canada, and he helped finance the elegant Hotel Gault in Montreal.

He and Marchand came to Dominica (her name, Dominique, matches the island) in 1998 and stayed at a small cottage in the Coulibri area. They were instantly smitten and began to form the idea of building a sustainable village in the area. That morphed into what is now Coulibri Ridge.

Daniel Langlois, co-founder of Coulibri Ridge on Dominica.

Photo Courtesy Coulibri Ridge

Laura Ell, general manager, Jungle Bay Resort, Dominica.

Photo courtesy Jungle Bay Resort

“We just loved the area and the people,” Marchand

Langlois is generally publicity shy, but he wants to show the world that a hotel can be built sustainably, and seemed happy to talk about his project. He’s a wiry, fastmoving guy who left “energetic” in the rearview mirror several exits back.

His face lit up like a fireworks show on St. Jean Baptiste Day when he showed me his solar panels and explained how the vertical blades on the hotel’s wind turbines help keep birds and bats from getting confused and being torn to bits.

Langlois, a self-taught architect who has built offices around the world, designed everything.

He first did a lot of the work himself, as local workers didn’t initially have the required training. It took many years more than he had hoped, but using locals to build the resort was part of his pledge to build sustainably and help the local economy.

The hotel was built with a steel and concrete frame, with local, five to seveninch stone on top. The idea was to resist Caribbean hurricanes. Little did Langlois know that his theories would be tested sooner than he would have hoped. Hurricane Maria slammed into the south end of Dominica in 2019 and wiped out acres and acres of property.

“Two days after the hurricane I stood on the roof. Everything was totally destroyed. (The nearby town of) Soufriere had no running water for a year. There was no electricity for oneand-a-half years.”

The island got back on its feet, partly with help from Langlois and Coulibri Ridge, which helped rebuild a local school and the village’s vital jetty. Alas, along came a worldwide pandemic. Finally, the hotel opened late in 2022.

The 285-acre resort pops up out of the surrounding jungle in a commanding style but doesn’t seem out of place given its use of local stone. Some of the interior woodwork is made from unwanted teak from Indonesia.

The rooms are stunning. Many have plunge pools and lovely views of the island of Montserrat to the south.

Coulibri Ridge is part of the Preferred Hotels Beyond Green brand, a testament to their eco-friendly bonafides.

Langlois told me he wants to work with other hotels so they can avoid the traps he fell into and get to sustainability faster.

“You can’t do this with a 160-room hotel. Eventually, yes, but not yet.”

In addition to his sustainability credentials, Langlois has supported a number of charitable works on the island. He created the Resilient Dominica Project (REZDM), which helped rebuild the nearby primary school and helped construct a new jetty in the town of Soufriere. The project has also helped protect coral in the nearby Soufriere-Scotts Head Marine Reserve, which has some of the best diving in the region.

Photo courtesy Jungle Bay Resort

Photo courtesy Secret Bay Resort

Marchand said the island offers an intimacy that’s hard to find in many parts of the Caribbean.

“Dominica’s not overpopulated (roughly 70,000 residents on an island of 750 square kilometres), so it’s easy to find yourself in nature here,” she told me over a beautiful lunch with local barracuda. She stopped eating for a moment and smiled.

“Also, there’s not much to do at night, so you’re not distracted from enjoying each other’s company.”

Ell, the Calgarian who is the general manager at Jungle Bay Resort, has followed a considerably different path than Langlois, but one that’s just as intriguing.

She was a member of the International Eco Tourism Society some years ago when she met Jungle Bay owner Sam Raphael.

“I was working in Washington D.C., but, as a Canadian, I had a limited working visa, and it was about to expire. He

invited me down to Dominica for two weeks to do some advising and see how sustainable their operation was.

“When I was down here his thenmanager had to resign,” she told me with a laugh. “He had proposed to his girlfriend. She said ‘Yes, I’ll marry you, but Dominica’s not for me. I like my high heels. I like my parties. I like my shopping, and Dominica doesn’t have any of that.’”

Ell then served as assistant manager at Jungle Bay (which was in another part of the island at the time) and also led the marketing team. She worked remotely for Jungle Bay and other clients for some 15 years, including stints in places like Uganda. She consulted for Jungle Bay and also for a small, quasi-governmental group called the United Nations.

I spoke with her over a poolside breakfast one day at Jungle Bay, the blue Caribbean glistening a few hundred metres down the hill. I later called her from Canada to chat on the phone. As she explained more about her history (a master’s degree specializing

in Indigenous spas and sustainable tourism, and teaching at Royal Roads University in Victoria B.C.), a customer came into the resort.

“Nice to see you,” I could hear her say to her arriving guests. “Good. Thanks. You’re just checking in? Wonderful. Hang on, Jim, I’ll call you right back.”

Having presumably taken care of her guests, Ell tells me she came back to Jungle Bay again in 2022. She also brought her mom, who lives near Edmonton and helped with interior design and décor at the new site.

Jungle Bay started as more of a casual spot and was situated on the east side of the island. But it was badly treated by Tropical Storm Erika in 2015, and they opted to rebuild sturdier units on a hillside overlooking the southwest coast. The first phase opened in 2019.

The new resort is perhaps best described as casual or natural luxury, with a series of cottages in small groups scattered on a steep bit of terrain, surrounded by lush landscaping and

Baptiste Beach is probably the best beach on the island of Dominica.

A sunset at Jungle Bay Resort on Dominica.

JIM BYERS PHOTO

JPhoto Courtesy Discover Dominica

tropical flowers. My cottage had a stone sink, a French press coffee maker, and a shower with windows so I could shampoo while looking out at the deep green, forested mountains that make Dominica a hikers’ paradise.

On my first full day on-site, I woke up at 6 a.m. and walked out onto my wooden patio to see deep, purple mountains partly lit by a perfect, crescent moon. Soft pink and grey clouds appeared to the east, and the distant sound of rolling surf sang a soft lullaby.

The morning light revealed a riot of tropical plants, including deep green, leafy banana trees and multi-coloured croton in fiery shades of crimson, green and yellow.

Ell told me they’ve planted several tropical fruit trees that many locals hadn’t seen in years. They also work closely with the community; buying produce and fish from local producers, and helping local kids with school tuition. The Jungle Bay Community

Fund consists of donations from guests, staff who generously give 10 per cent of their gratuities, and lodge owners who commit to supporting community needs; everything from healthcare and literacy to recreation, business mentorship, education and more.

Ell is a reiki practitioner with a soft, easy way about her. She’s perfect for the relaxed vibe you’ll get at Jungle Bay, where the dress code is “hiking casual” and morning breakfast chats centre around what dive or waterfall guests will be tackling that day.

Ell said owner Sam Raphael was a pioneer in wellness “before it was trendy to do yoga retreats and adventure and outdoors” in the Caribbean.

“Everyone else was sun, sand and sea. But he came up with this concept 20 years ago. Now I feel he was at the forefront of all that.

“He wants the property to be a replicable model, rather than keep it as a trade

secret. He wants people to copy him, not in an egotistical way, but a ‘Go ahead and use my model because it works well.’ Guests are happy, it creates jobs in a sustainable way, and you’re making a more thoughtful choice with your vacation as well.”

Dominica has become a trendy pick in travel magazines. National Geographic was here a few months ago, as was Leonardo Di Caprio. The 60 Minutes crew was recently on the island to do a segment on the sperm whales of Dominica, who hang out in the nutrientrich waters off the west coast on a yearround basis.

“It’s the nature that brought me here but it’s the people that keep me here. They're warm, and hospitable. We call it the Dominica family. We’re here for each other. They really treat you in a warm, welcoming way.

“It’s very special.”

InterContinental Dominica Cabrits Resort & Spa is a posh hotel on the north coast of Dominica.

Emerald Pool.

Supplied photo.

ANOTHER CANADIAN CONNECTION

On the last night of my visit in January, I dined at a place called PoZ in the laid-back, seaside town of Calibishie. It’s the nickname of Troy “Positive” Dixon, a Southern Ontario business type who fled to warmer climes a few years back.

Dixon is best known for his restaurant, but he’s also got several, casual, treehouse-style units, which sit on high perches to help catch the breeze and feature tons of beautiful wood.

“Dominica is unspoiled and not commercialized,” Dixon told me as I tucked into fresh snapper with coconut milk at his open-air restaurant. “I call it ‘The land time forgot.’ It’s for seasoned travellers who love hiking and natural beauty, and real smiles from real people.”

OTHER HOTELS WORTH CHECKING OUT

Secret Bay was voted best resort in the Caribbean by Travel + Leisure readers for both 2020 and 2022 when they also voted Dominica the best Caribbean Island. The resort has a series of clifftop villas that are sleek and sexy. Most have amazing ocean views and enough privacy to satisfy a Hollywood A-list celebrity. The food is divine.

InterContinental Dominica Cabrits Resort & Spa is a fairly new hotel on the north end of the island with a posh, European feel. There’s a black sand beach and a fabulous swimming pool complex, as well as a romantic fire pit for night-time canoodling.

Wanderlust Caribbean Adventure Travel Boutique Hotel has four rooms perched in a building on a hill overlooking a nice beach and a group of small islands in Calibishie. Rooms are booked in conjunction with guided tours and hikes,

with some meals included. Rooms are bright and modern, with spacious patios overlooking the coast. Owners Tom and Sharie Decherd are welcoming hosts who used to live in Charlotte, North Carolina. Tom seemingly knows every inch—and nearly every person—on the island. Sharie, who was born in Puerto Rico, makes a mean pina colada.

THINGS TO DO

Dominica isn’t known as a “fly and flop” destination. Its best-known features are the hiking trails that wind around jagged mountain peaks, towering waterfalls plunging over deep-green jungle cliffs, dark hummingbirds with iridescent blue chests, and some of the best diving on the planet. Batibou Beach is a stunning spot near the town of Calibishie, and almost certainly the best stretch of sand on the island. The beach has a tiki bar where two sisters make amazing lunches and cocktails.

Baptiste Beach on the island of Dominica.

Photo Courtesy Discover Dominica

EMERGENCY PREPAREDNESS

CLIMATE CHANGE: ADDING FUEL TO THE FIRE

Floods, fires, and storms can cost hotels big money and business. Here’s how hotel owners and insurance experts say you can better protect your business.

By Jade Prevost-Manuel

Hastily built dams, quick dike repairs, and emergency evacuation orders—this was the city of Abbotsford, B.C.’s reality when heavy floods tore through the community in November 2021. Record rainfall turned freeways into raging rivers, swallowing whatever stood in their path.

It was evening when they breached the doors of the Clarion Hotel & Conference Centre, submerging the lobby in nearly a foot of floodwater and its conference centre in about three feet. Flooring, drywall, banquet furniture, and four elevators were destroyed. So were the cars in the hotel’s parking lot, most of which were subsequently written off. Two and a half months passed before staff could get the hotel up and running. The floodwaters, contaminated with dead animals and agricultural fertilizer, caused north of $8 million in damage

says the hotel’s general manager, Daniel Laverick. One and a half years after the disaster, the hotel is still feeling the effects of the flood. Repairs to remedy the damage it inflicted are ongoing. Financially, another flood would be catastrophic.

“Our insurance premium increased dramatically,” Laverick told STAY Magazine, “And we are no longer eligible to receive flood insurance, so this was a one and done.”

The cause of the flood was an atmospheric river, a natural phenomenon whereby narrow corridors in the sky carry massive volumes of water vapour from the tropics to cooler areas, like Canada and the United States. The vapour is highly concentrated—a river can be several thousand kilometres long yet only a few hundred wide and can carry several

times the amount of water that flows through some of the world’s largest rivers. When that vapour is released as rain, heavy flooding can ensue.

The damage resulting from floods like the one that affected the Clarion, as well as fires and storms, can cost hotels big business and even their insurance coverage. Contingency plans and preparations can help reduce the stress and cost associated with these disasters and provide a roadmap for a quicker recovery.

“I think the big thing is to make sure that there are certain precautions put in place, whether it’s knowing what the communication is going to look like to guests [or] knowing how you are going to ensure the rooms are empty,” says vice president of hospitality and real estate at HUB International, Karim Chandani, who works on disaster claims

Emergency Preparedness

for properties across Canada. “Those are the types of things that I think the owners can really take responsibility for and ensure that they are doing everything they can to keep people safe.”

In Canada, all-risk insurance covers properties for a wide range of adverse weather events. Where a property is situated, and its history with adverse events, however, has a huge impact on its deductible. Properties in areas that are prone to natural disasters often pay very high deductibles—in flood, fire, and earthquake zones, property owners can pay as much as $250,000 out of pocket, says Chandani, 25 times what a property in a disaster-neutral area could be paying. Deductibles also shoot up with each claim that a property makes.

With bigger and more frequent storms—scientific consensus states that climate change will likely exacerbate the severity of natural storms in the future— the hospitality industry is poised to see higher deductibles and larger claims.

“Climate change is something that's not going away,” says Chandani. “It is real, and it is one of the largest threats that insurance companies are concerned with, [especially] the frequency [and] how quickly these things are happening.”

Historically, hotels, inns, and resorts have served as places of refuge and temporary housing for those affected by natural disasters and extreme weather conditions. When landslides and floods swept through the Fraser and Nicola

Valleys in 2021, B.C. hotels opened their doors to evacuees. During Hurricane Fiona, a storm that inflicted serious damage on Canada’ east coast* in 2022, P.E.I. islanders flocked to Charlottetown hotels while they waited for the electricity and water to turn back on at home. But hotels, like any other structure or business, aren’t immune. In 2016, the owners of a Super 8 Hotel watched their building go up in flames on TV during the Fort McMurray wildfire, Canada’s most expensive disaster to date.

This year, Alberta is positioned to experience one of the worst wildfire seasons on record. The year’s wildfires, having yet reached peak season, have already burned more than [1 million] hectares of land—five times the area that last year’s fires claimed—and

displaced some 30,000 people Among them are staff and guests of a Holiday Inn in Edson, who on May 5th were forced to evacuate the area for some 36 hours due to a large fire burning 25 kilometres outside the rural Alberta town. Upwards of 50 guests and staff—as well as staff family members— were displaced to a hotel about 40 minutes west in Hinton, Alberta, where the ballroom was transformed into an evacuation center with food, water, and everything they needed to feel safe.

Critical to their response was the support of the Alberta Hotel & Lodging Association (AHLA), says president of ZS Holdings Ltd.—the group that owns the inn—Shazma Charania. Throughout the week, they had received updates from the AHLA on wildfire preparedness and the protocols for

dealing with an evacuation or fire. When Charania’s team found themselves with two hours notice to respond to the threat, the AHLA handbook was their first point of reference.

“I think there's that [first] panic moment of, ‘Oh my goodness, what are we going to do,’” says Charania. “But then once you just focus on what you have to do and start executing […] I think we all did a really good job.”

The hotel printed emergency reports every hour to keep staff informed in case power failed. They knocked on doors to get everyone off the property and alerted those who weren’t on the property at the time—like guests exploring the area—of the situation. They locked and secured the building, had emergency contact information

on hand, contacted guests who’d reserved rooms for the coming days, and prepared transportation, accommodations, and food for evacuees at a safe property.

When they were cleared to return to Edson, management found no damage to the building, save for a leak. The fire never made it to Edson or the doors of the Holiday Inn, but the cost of displacing dozens of people, cancelling reservations, and compensating workers when the business was non-operational has affected the business, says Charania. While she was unable to comment on the cost of the event ahead of official calculations, she says the hotel started losing revenue Friday night for a period of about five to six days.

Emergency Preparedness

“Even though we were allowed to come back to the town, it was under your own risk,” says Charania. “So, you're gonna lose all that guest revenue.”

Charania says she isn’t worried about the impact that climate change could have on her business—this was the hotel’s first evacuation effort for a fire. She does say that in the event of a disaster, knowing how to respond to it internally is key to managing damage and ensuring the safety of guests and staff.

“These things are going to happen, in terms of natural disasters or something that obviously you can't plan for,” says Charania. “But you can be prepared for [them]. All you can do is make sure that you practice drills and have the tools in place for your team to be successful through an emergency.”

In a study that interviewed more than 60 hotel managers across Europe, managers’ previous experience of a natural disaster, duration of managerial experience, and organizational category and size had a positive effect on hotel resilience. When Laverick hears the words “atmospheric river,” they send a chill down his spine. But since the 2021 event, the Clarion has made more internal efforts to make sure their team is prepared if another disaster strikes. The property is currently reviewing ways to prevent damage against future floods—though with a large entrance and exit, it’s proven a challenge.

Laverick recommends that hotels review their insurance policies to ensure they have the right coverage, not just for their assets but for their personnel, too. The hotel’s quick response to the flood demonstrated the value of emergency

preparedness training—the Clarion had guests and employees onsite during the flood, and the quick reaction of key staff was critical for the safety of their staff and guests.

“Spring and fall and extreme weather conditions are always a concern,” Laverick tells STAY. “I don’t think it comes down specifically to the hospitality businesses, I think emergency preparedness should be on the agenda for all businesses, local chamber of commerce and levels of government.”

*Last year, STAY Magazine reported on the resilience of Hotel Port Aux Basques after Hurricane Fiona in the Sept/Nov 2022 issue. To read our coverage, click here.

TIPS FOR RESPONDING TO A NATURAL EMERGENCY

• Focus first and foremost on the safety of guests and staff.

• Connect with properties in your area to create a coordinated response in the event of an evacuation.

• Ensure staff has access to both internal and external emergency preparedness information.

• Refer to your hotel association’s procedures for closing a property (in the event of a fire you’ll want to close all windows and doors to stifle flames).

• Plan to communicate updates effectively and often to your guests, staff, and community members.

• Once the immediate threats have subsided, gather the information you’ll need to file an insurance claim and contact your provider.

• Visit HUB International's Wildfire Resource Centre

AS WE FIGHT THE ALBERTA AND B.C. WILDFIRES, WE MUST ALSO PLAN FOR FUTURE DISASTERS

BRITISH COLUMBIA AND ALBERTA ARE ON FIRE.

Tens of thousands of people have had to evacuate in Alberta, while much of B.C. is already experiencing higherthan-usual wildfire risk. With more than 150 fires currently burning across the two provinces, a hazardous haze is blanketing Calgary and affecting air quality as far away as the East Coast.

The average area burned by wildfires and the cost of suppression have grown steadily over the past 12 years, indicating increasingly larger and more intense wildfires. The 2017 fire season set the record for most hectares burned in B.C. It was surpassed in 2018. Three years later, a wildfire destroyed the town of Lytton, B.C. That season incurred the highest-ever cost of fire suppression— $718 million.

Last year, B.C. adopted a year-round wildfire service in the hopes of mitigating wildfire risk through actions such as controlled burns, indicating a shift from a responsive mindset to a more proactive one. But as we look beyond the monumental task of reducing yearly fire losses, we come upon a much bigger question: How do we prepare for disasters whose timing is uncertain, like earthquakes, while also responding to immediate crises?

High-risk, high-uncertainty events like earthquakes tend to fall out of view when we are occupied with more

predictable seasonal events like wildfires, which have very visible effects on our lives and the landscape right now. Our research suggests a critical need for integrated disaster governance and policy planning that considers the full range of risks, regardless of whether they are affecting us now or in the future.

THE PRESENT BIAS

Research and life experience tells us that, as humans, we are good at focusing on immediate needs while pushing longer-term processes down the priority list until they gain urgency.

We tend to follow the same patterns when facing disasters. We are good at focusing on things that are on fire now while being unable or unwilling to take on the long-term tasks that will keep other disasters from occurring in the first place. Studies in behavioural economics call this tendency to place a higher value on the current time “present bias.”

When applied to disaster planning, this means future preparedness and mitigation activities can face an uphill battle, even though spending slightly more in the present, for instance in constructing earthquake-safe buildings, may result in large future benefits.

Jonathan Eaton Ph.D. candidate in anthropology, University of British Columbia

Sara Shneiderman Associate professor, anthropology department and School of Public Policy & Global Affairs, University of British Columbia

planning, as the vast majority of societal attention and resources are dedicated to moments in crisis, rather than to preventing crises.

DEALING WITH UNCERTAINTY

One way of dealing with uncertainty in disaster planning is shifting the ways that we think about the relationship disasters have with time. Adapting a phrase that anthropologist Stephanie Kane has applied to river courses, the potential for damaging earthquakes sits at “the precarious intersections of our historical and geological times.”

Geological time exists on a scale far exceeding human lifespans, but we encounter it through the hazards that affect our lives and homes in the present.

Major Cascadia Subduction Zone (CSZ) earthquakes, for example, tend to occur along the West Coast in intervals of 200 to 600 years. Meanwhile, a combination of Indigenous oral histories, coastal ghost forests and Japanese records of an orphan tsunami, show the last CSZ earthquake occurred on Jan. 26, 1700. This is the moment that the CSZ’s geological process last intersected with historical time.

potentially cause thousands of deaths and displace upwards of a million people in B.C., Washington and Oregon. Yet it still feels unreal, as it might happen tomorrow or long after we are dead.

A MULTI-HAZARD APPROACH

Hazards like earthquakes, storms and wildfires are part of the natural world but they don’t have to result in disasters.

Disasters occur when we are not prepared for the hazards that we know can happen, and their inequitable harms fall disproportionately on the most vulnerable members of our society. Multiple hazards can compound to create a multilayered disaster, like when extreme heat in B.C. coincided with the Covid-19 pandemic in the summer of 2021.

This is why we need to take on a “multi-hazard approach” to reducing disaster risk. A multi-hazard approach looks at the full range of possible hazards in relation to each other: fires, floods, extreme heat, pandemics and earthquakes.

Sometimes these hazards are causally interconnected— for instance, debris flows or landslides that occur in the wake of wildfire. But even when their onset is distinct, many of the strategies needed for responding to one can also be useful for responding to others, if the relevant

Future Disasters

agencies, governments and residents communicate efficiently to develop shared protocols.

The establishment of B.C.’s new Ministry of Emergency Management and Climate Readiness last year is a tacit acknowledgement that better coordination is needed to help mitigate the multiple hazards B.C. faces, especially as the climate crisis accelerates.

KEEPING DISASTER KNOWLEDGE PRESENT

While present crises may overshadow the past and limit considerations of the future, they can also inspire people to plan for future scenarios, for instance through earthquake modelling.

Keeping the knowledge of disaster present through cultural practice can act as a source of social cohesion. Our current understanding of the long-term earthquake risk in Cascadia is grounded as much in geotechnical analyses as it is in the intergenerational knowledge of the Indigenous peoples of the region.

Long before the last CSZ earthquake in 1700, First Nations have transmitted knowledge about earthquakes and tsunamis, as well as responses to them, through visual art, oral history and dance. It is no surprise they are now at

the forefront of forging strategies for coordinated disaster response.

Knowledge transmission requires communication and a desire for understanding shared experiences by those in the aftermath of a disaster and those yet to face one. This kind of society-building takes place through intergenerational, intercultural sharing and communitymaking efforts by neighbours and policymakers who can see the value in the “soft” mitigation measures of relationship-building at the slow speed of trust.

After more than a hundred years of banned cultural burning, wildfires are more intense than ever. Rather than suppressing all fires, B.C.’s firefighting services are now learning to work with Indigenous people to manage fire as a part of a healthy ecosystem. This requires thinking in terms of the whole life cycle of the forest, rather than a single fire season.

A shift in how we think about time can help us avoid our present bias and be ready for the next big disaster.

This article was previously published in The Conversation.

Elmhirst's Resort

RICE LAKE, PETERBOROUGH, ONTARIO

STAY magazine has been regularly featuring interviews with Canadian hoteliers to gauge how things are going in the industry. In this edition, we catch up with Greg Elmhirst, general manager at Elmhirst's Resort, a family-friendly spot with cottages on Rice Lake, near Peterborough, Ontario.

By Jim Byers

HOW DID THINGS GO DURING THE PANDEMIC?

The pandemic for us unfolded in stages.

Stage 1 was shock and awe. Laying off 90 per cent of our resort team, gathering up all the beverage alcohol and stashing it in the wine cellar, and emptying the fridges.

Stage 2 was the lockdown that felt like it went on forever. We didn’t know when we would reopen, but it seemed like if we did it was going to be under a brand-new operating system. The family set about doing spring cleaning on their own: grounds clean up, power-washing buildings, gardening, and putting out lawn furniture. We had a feeling it would be a rush to be ready to re-open so we wanted this part done to focus on staff and guests. Advance planning was measured in days instead of years. We did counselling sessions for our staff on Zoom calls to build them up to be ready for guests.

Stage 3 was re-opening - taking appointments for everything, adjusting to takeout and outdoor dining, socially distant management meetings, etc…

WHEN DID THINGS START TO GET BACK TO NORMAL?

Normal? What is that anyway? The market is still shifting rapidly. For example a double cohort wedding season from late 2021 all the way through 2022 with all the events that were postponed due to the pandemic and then settling back into a more normal pace in 2023. We had 1.75 times pre-Covid room demand when international travel was so difficult. Currently, we are about 120 per cent of pre-Covid rooms demand. Conference demand is picking up as teams want a more personal connection after years of virtual meetings.

WHERE WOULD YOU SAY WE ARE NOW COMPARED TO 2019? DO YOU THINK RURAL AREAS ARE AHEAD OF CITIES IN TERMS OF THEIR RECOVERY?

Rural areas in my estimation are ahead of urban areas in terms of rooms demand compared to the pre-pandemic era. The challenge is a lack of labour supply in all areas that prevents them from being in full operation. Core business units of big resort operations in rural areas simply can’t operate on a normal schedule or at full capacity. This pressure is easing slowly but is still significant.

Independent Voices

HOW DO YOU THINK CUSTOMERS AND THEIR DEMANDS/REQUIREMENTS HAVE CHANGED SINCE 2019?

At Elmhirst’s we began a strategic plan review as soon as travel in Ontario opened in a meaningful way. The results were a renewed focus on providing guests with their own space and an environment where they were in control of their experience. We implemented new technology applications in communication, service delivery and contactless checkin to make the guest stay easier without adding more team members. In terms of guest attitudes. they were generally very content with low-contact experiences; lots of hiking, take-out dining, and lower frequency of contact. Check-in, close the cottage door and relax with the family. Obviously, there were smaller parties and less reunions. Slow travel was definitely a thing, and our strategic plan helped us to be ready. Revenge

travel was a thing in 2021; expectations were definitely higher. and folks put it front and centre.

IS STAFFING AN ISSUE IN YOUR AREA?

It certainly is. It's a source of tension for Elmhirst’s Resort, but we are a smaller operation with a decent population density. We are also a year-round operation, which makes it easier. We also considered the values of our local workforce in our mission, vision and values in the strategic planning process. Kind of (author) Simon Sinek's “Start With Why” thinking.

HAVE YOU RAISED PRICES?

At a base level our room rates increase 1 to 1.5 per cent annually, and food prices in the past year are up about 5 per cent. We have instituted some surge pricing in peak demand

periods and patience for “loss leaders” is gone. If a service doesn’t perform it’s in the bin.

WHAT’S YOUR TAKE ON 2023 AND THE COMING SUMMER SEASON? ARE THERE ISSUES THAT KEEP YOU AWAKE AT NIGHT?

There are headwinds due to inflation and competition from international destinations that are easier to reach again. Not as easy as they used to be, though. Many Ontario residents discovered our travel gems (and got a tax break for it!) during the pandemic. Demand for rural resort experiences will continue in my estimation as long as they continue to evolve with the market and offer good value.

Nothing keeps me up at night. I empty the tanks at work, sleep like a baby, then get up and do it again.

LET’S TALK ABOUT HOW OUR FOUR NEWEST BRANDS CAN HELP GROW YOUR BUSINESS!

We’re proud to celebrate our 2023 Platinum Guest Satisfaction Award winners

From coast to coast, these outstanding hotels went above and beyond to exceed expectations and delight their guests. And based on their stellar reviews, guests certainly took note of their phenomenal efforts.

Comfort Inn & Suites, Terrace, BC

Econo Lodge, Taber, AB

Quattro Hotel & Conference Centre, Ascend Hotel Collection, Sault Ste. Marie, ON

Comfort Inn, Sturgeon Falls, ON

Quality Inn & Suites, Lévis, QC

Quality Suites, Drummondville, QC

Quality Inn & Suites, Matane, QC

Sleep Inn & Suites Québec City East, Boischatel, QC

Quality Hotel, Clarenville, NL

Congratulations to these award-winning hotels for their hard work, commitment and top-notch service.

Canadian airlines brace for a summer of change as U.S. airlines consider reforms

John Gradek

The United States Government Accountability Office (GAO) recently issued a report on the causes of flight disruptions before and after the pandemic. The report also outlined the challenges airlines faced managing and responding to these flight disruptions.

The report was the result of requests made by the U.S. Congress to the GAO to examine key changes in the U.S. passenger airline industry resulting from the pandemic.

For those of us who experienced the chaotic Canadian aviation environment last summer—especially those that used Toronto’s Pearson Airport and Montréal’s Trudeau Airport—it is difficult to forget the lines of passengers reportedly waiting in queues for hours, mishandled baggage and unprecedented flight delays.

For an industry with extensive regulatory oversight provided by the federal government, it has been interesting to examine and contrast the parliamentary efforts made in Canada to address flight disruptions with similar efforts being made by U.S. Congress.

CANADIAN AIRLINE REFORMS

Canada’s Standing Committee on Transport, Infrastructure and Communities held a meeting on Aug. 19, 2022, to hear Omar Alghabra, the minister of transport, voice his concerns about flight delays and cancellations.

The meeting focused on the need to better protect air travellers’ rights in the face of such events.

This focus on passenger rights continues to this day. At the end of April, Alghabra announced reforms for the Canadian Transportation Agency’s

appeal-handling process and the Canadian Transportation Act. Airlines will be required to handle claims and provide a response to complaints within 30 days.

The amendments, which are currently tabled in the House of Commons as part of a budget implementation bill, will affect the penalties air carriers face for violating air passenger protection rights.

In particular, the amendments will increase the maximum fine for violations to $250,000 and charge carriers with the regulatory cost of complaints.

The GAO’s analysis and recommendations, by comparison, are much more detailed.

U.S. AIRLINE REFORMS

The U.S. Department of Transportation has recently initiated passenger

Faculty lecturer and program coordinator, supply chain, logistics and operations management, McGill University

protection regulation development similar to the ones Canada has had in place since 2019.

However, the Department of Transportation has yet to address specific compensation levels for passengers that have experienced flight delays—provisions that have already been adopted by Canada and are similar to those in effect in the European Union.

An intriguing element of the GAO report is its review of the U.S. Department of Transportation’s awareness of airline scheduling practices and how such practices have impacted flight delays and cancellations.

In its report, the GAO stated the Department of Transportation has the authority to “regulate unfair and deceptive practices of airlines, which includes unrealistic scheduling practices.”

The Department of Transportation defines unrealistic scheduling as

“the scheduling of flights that airlines cannot generally and reasonably be expected to fulfill.”

The report concludes that various stakeholders, including several airlines and worker unions, published unrealistic flight schedules, which carriers cannot reasonably be expected to fulfill.

The Department of Transportation indicated it will make an effort next year to build and sustain its oversight and analysis of airline scheduling practices. This will ensure airlines maintain realistic schedules and minimize the impact of flight disruptions on passengers.

LESSONS FOR CANADA

It is critical that effort be made to provide fair and meaningful compensation in a timely manner to air passengers that have been subjected to airline delays and cancellations. But it is equally—if not more—important to address the underlying causes of such disruptions.

Effective oversight of published airline schedules must be provided. Canadian air travellers should be able to trust an airline’s published schedule—especially as air travellers often purchase tickets long before their flight.

Should Transport Canada step into this oversight role? It might be time to seriously consider establishing a distinct civil aviation authority, separate from Transport Canada.

Canadians’ patience with the actions of various organizations in Canada’s aviation sector has been wearing thin. At the same time, rumblings of a return to regulation is starting up in the U.S. airline industry.

Canada’s experiment with deregulation occurred close to 40 years ago, but airline scheduling oversight might be one of several areas ripe for similar scheduling reforms in the face of airline disruptions.

This article was previously published in The Conversation.

IN CONVERSATION WITH

NICOLE NGUYEN

Senior Vice President

CBRE Hotels Valuation & Advisory Services group, Canada

By Stacey Newman

CBRE HOTELS CANADA RELEASED ITS CBRE HOTELS MARKET UPDATE SPRING 2023 REPORT

IN APRIL, which included its updated projections for 2023 with performance indicators and analyses of Canadian regions and markets. Nicole Nguyen is senior vice president of CBRE Hotels’ Valuation & Advisory Services group in Canada. I spoke with Nguyen about this and other reports from CBRE Hotels, and for her updated outlook for the year as we inch towards the summer.

Annually, CBRE Hotels’ spring report serves as an update, to the original forecast, which is released in September each year, once the final numbers for the year prior are in. While the national projections are high-level and are focused on the industry as a whole, there are very different dynamics at play in the various markets across the country.

In its spring update, nationally for 2023, CBRE projects occupancy will increase to 65 per cent, up 4 points from 2022. ADR is forecast to hit $186, 4 per cent above 2022, and RevPAR is projected to reach $122, up 11 per cent from 2022 and 15 per cent ahead of 2019. “The big takeaway here is that by 2023 we'll be back to national peak occupancy,” says Nguyen.

RATE OF GROWTH

In 2020, nationally ADR dropped to $128—the lowest on record in recent history (we would have to go back to 2009 to see similar numbers). Nguyen talks about a $35 drop from 2019 levels, explaining that much of the rebound in ADR was actually the return of demand in 2022 when “we saw ADR grow at 33 per cent,” she says.

Peak occupancy industry-wide was about 65 per cent in both 2018 and 2019 and it is expected that we're getting back to that level in 2023. In terms of recovery, the ADR is projected to grow relative to 2022, but at a more moderate pace of growth, she explains.

“As those last couple of points in occupancy return, we're expecting to see growth in corporate and meeting/ conference demand, and those are largely contracted rate segments. Those rates are negotiated and agreed to in advance—sometimes one year or multiple years ahead of time—and so there isn’t the same opportunity to yield on rates in the same way we saw in, 2022, where the growth in ADR was heavily influenced by leisure demand. As we see those last couple of points in occupancy building back, we expect it to be weighted more towards the contracted rate business. And, that's why we expect to see that moderation of the ADR growth,” says Nguyen. It is important to

remember, she reminds us, that four per cent ADR growth is still a good pace of growth and above the long-run average for Canada.

REVPAR

“CBRE Hotels projects that we’re going to finish 2023 at around $122. The previous peak was $106 in 2019, and we exceeded that in 2022 at $109,” offers Nguyen. Operators aren’t quite there on an inflation-adjusted basis, but we're getting close to full recovery, not just a nominal one, she explains.

BY MARKET

In the Spring Market Update, CBRE presents the differences in RevPAR performance between Major Urban Downtown located properties versus all other locations in 2022. Although the industry overall saw RevPAR recover and slightly exceed 2019 levels, the Major Urban Downtown locations lagged behind the other markets, which was not all that much of a surprise.

Nguyen emphasizes that in general major urban downtown markets need segments such as national & global corporate, large-format meetings and conferences, international tours and similar to return before these markets will see a full recovery. Because the markets didn't

completely open up in 2022 until spring, and this type of business has a longer booking window, the recovery in these markets has been slower. Even so, major urban downtown markets still saw a lot of growth over 2021 and 2020 but missed recovering fully to 2019 levels.

SHIFTS IN WORKING SPACES

In terms of concerns about the impact of virtual meetings as well as remote or hybrid work on workers returning to an office environment and travelling, at the moment there is stability if not clarity, says Nguyen. “For the most part companies have encouraged or already implemented policies around hybrid work, those decisions have been made and have been in place for close to a year so the current corporate travel environment is more settled today than 18 months ago.”

Nguyen hearkens back to 9/11 when experts were nearcertain that corporate travel would never recover. At that time, many people were convinced that it was like the death knell for the office market. What actually happened was a period where travellers were more cautious. Companies were tentative at best. Nguyen says that corporate entities were asking themselves, what kind of liability they would be assuming if they asked employees to travel. “There was a period of uncertainty and a time where corporate travel was

reduced,” says Nguyen, “But eventually corporate travel returned and grew,” she states.

Maybe there are fundamental changes following major disruptions. Maybe people have adjusted their travel schedules according to new ideals, maybe things look a little bit different, today, maybe it is more about combined business-leisure goals influencing travel itineraries… in any case “we do think that the volume will return, it may just take a little longer to build back and look a little different once it does,” explains Nguyen.

Looking at the numbers and forecasts from a historical perspective also serves as a reminder that companies and corporate culture are always in some state of flux. From generation to generation, disruption to disruption, we see how people respond to the adversity they’re living through and the economic conditions of the day.

UNDERSTANDING RISK

The biggest risk right now in the Canadian marketplace is the same as it is globally—some sort of recession. If it happens, how mild or deep will it be? How long will it be? That's the biggest risk we’re facing right now along with the uncertainty around it.

At any other point in time when the recessionary chatter starts, it's a dual-pronged issue and it hits the hotel industry usually first and hard. And that's because, on the leisure side, travel is driven by household discretionary income. But if you're worried about losing your job, then people typically cut back on discretionary income immediately and focus on the basics—paying the bills, and keeping the household afloat. They don't travel.

On the corporate side, the first thing that companies typically do in that environment is to look at it through the lens that, “Okay, it's not possible to grow revenues, so, we

need to look for other ways to continue to provide value to our shareholders.” The way they might do that is to reduce expenses. The first thing on the chopping box after the marketing budget is usually travel and entertainment, conferences and incentives. A recession would likely set the industry back as we're still in recovery mode. That’s probably the biggest risk to the industry at the moment.

That said the indicators seem to change from day to day. LABOUR

The other thing that the industry is struggling with isn’t unique to our industry—meeting labour requirements. It’s such a challenging factor for hotel operators today to get sufficient labour to satisfy today’s demand. And, we are seeing growth in wage rates in our sector because there's such a shortage.

During Covid, we had to lay off a lot of people and they took jobs elsewhere. How can we draw those people back to the industry? Now we’re competing with other sectors that are also looking to grow their labour pools. Post-pandemic, many people are looking at their values and other factors more carefully than ever before.

Hotels are competing very heavily for labour and when an owner is looking at their budget for the year, labour has a significant impact on both the top and bottom line. In some markets, it limits the number of rooms you can rent each night if you don't have x number of people to clean them. Operators have to be very careful about inventory management, but it is also the operators who, at the same time, have to make a certain amount of revenue. As a result, we’re seeing that dynamic pricing. By and large labour costs have increased, along with most input costs, and this is putting pressure on bottom lines.

LEVELLING OUT ON LEVEL OF SERVICE EXPECTATIONS

Regarding level of service expectations at this stage of the recovery, again things seem to have stabilized. Most of the brands have decided by now what they're doing and guests have had some time already to adapt to those changes and decide if that means that they want to move to a different tier within the brand for example.

The bulk of changes to service offerings were seen at the lower-tiered brands. Within the economy brands, there's more tolerance versus a luxury hotel in a downtown core. Those service expectations have gone right back to where they were before, and there's no tolerance from the guests to pay for those kinds of services given the rates guests expect to pay at those hotels.

Context matters, says Nguyen. “For example, if we are talking about Toronto in the summer, yes, that is always peak rate,” she explains. This was true pre-Covid because Toronto has come a long way in being recognized as a North American destination city. Toronto has grown in profile as a North American competitive city. Along with that comes

higher price points for goods and services, and not just hotel rooms.

LOOKING ABROAD AND AHEAD

Nguyen says that CBRE works closely with its U.S. counterparts and watched closely, throughout the Covid recovery, to see how things were playing out in the U.S. because they were out in front of Canada in terms of reopening borders and allowing people to travel etc.

Does this repeat in Canada, if so, how does it repeat here?

“Even now we're keeping an eye on factors that impact our industry directly like air travel—there seems to still be a lot of reduced capacity in the airline system and the logistics still aren't there,” says Nguyen.

THE COST OF DOING BUSINESS

It comes back around to watching the indicators to see if there is market uncertainty playing out, says Nguyen. There still seems to be a lot of interest from groups in hotel development and operations but, we've also seen interest rates rise rapidly as the Bank of Canada looks to cool inflation, and this happened in the U.S. as well, she states.

Now you've got interest rates well above what most hotel owners have ever seen unless they've been around since the mid-eighties. There are a lot of new entrants that have never operated in this environment where the cost of their debt is so much higher than it was 18 months ago.

As much as people want to be in the space, the cost of capital is presenting some challenges. If we're looking at new build supply, some of those projects that people have in planning stages likely won't go forward because the numbers just don't make sense when push comes to shove and you go to get financing and the lender says, well, it's like eight per cent. And it used to be, you know, four or four-and-a-half.

Nguyen elaborates; she thinks the supply curve will stay lower than average over the next couple of years given the cost of financing, the cost of construction and the fact that not many projects got underway in 2020, 2021 or even 2022. Alternatively, people are reinvesting in assets they already have. “I'm doing a lot more work with people who are asking, ‘Should I rebrand my hotel? Should I do a [property improvement plan] PIP program as opposed to looking at a build new?’ because

the numbers on a new build are harder to make sense of. ” As for PIPs, “the number we hear most often from our clients is that your costs are still running about 30 per cent higher than they were in 2019,” says Nguyen. “We're seeing these decisions being made and that's going to be reflected long term in national occupancy because if the supply curve slows down, we don't hit a recession and demand continues to grow, eventually there'll be pressure. This is what may play out for a little bit longer, “but we don't want people to get too excited about new supply and start building four or five projects in every market. Otherwise, we'll have the exact opposite problem,” concludes Nguyen.

While 2022 brought Canadian hotels a much more accelerated recovery than previously projected, 2023 is set to bring us moderate continued growth, with markets continuing to slowly build back segmentation and bottomline profits.

Read the full CBRE Hotels Market Update Spring 2023 report: https://www.cbre.ca/insights/figures/cbre-hotelscanada-market-update-spring-2023

Innsights

CHIC2023

WELCOMED 500+ ATTENDEES FROM ACROSS THE NORTH AMERICAN HOTEL SECTOR

The Canadian Hotel Investment Conference (CHIC) welcomed over 500 attendees from across Canada and the U.S. to the Fairmont Royal York in Toronto on April 18th and 19th.

CHIC2023 WAS BRIMMING WITH OPPORTUNITIES FOR NETWORKING, RECONNECTION AND LEARNING through this year’s jam-packed plenary sessions such as ‘Day (and Night) Tripper’ and ‘You can’t buy me love, but you could build me a hotel’—the titles of which paid playful homage to the music of the Beatles.

HIGHLIGHTS FROM THIS YEAR’S HOTEL INVESTMENT CONFERENCE AND INDUSTRY NETWORKING FORUM INCLUDED:

• Hotel transaction activity is back, with volume anticipated to reach the $2B mark in 2023:

• No real distress as lenders, brands, managers and owners worked together to weather the unprecedented demand shock brought on by the pandemic

• Hotel values are holding up well in relation to other commercial asset classes, creating opportunity for capital seeking to diversify its asset class to enter the hotel space which is largely viewed as an inflation-friendly investment

• Traditional transaction activity is returning with a significant reduction in hotels being acquired for alternate use and leaving inventory

• Coming off 2022 when three-quarters of the hotel deals done were $10M or less, investors are now refocusing on urban and legacy hotel opportunities, while still showing interest in secondary and tertiary markets for hotel assets with cogent stories

• Record ADR growth has fuelled post-pandemic recovery:

• Unlike past cycle downturns, ADR discounting was mitigated during the pandemic and as travel reopened, hotels were able to push ADRs to peak levels, especially with leisure demand

• While slower rate growth is inevitable, well-maintained hotels focused on exceeding guest ser vice expectations will be exceptionally positioned to maintain healthy average room rates going forward

• Successful rate strategies will need to go hand-in-hand with developing a guest experience value proposition by market segment, such as creating innovative spaces conducive to remote work to court the elusive business traveller or developing experiential pack ages to encourage the blending of work and leisure, or simply the extension of a stay

• New hotel development is returning, creating opportunity to elevate the hotel stock in many underserviced markets:

• Interest rates are still somewhat of a deterrent, but this is not expected to be a long-term issue

• Location is always most critical, followed by the right positioning of the hotel for the demand attracted to the area

• Labour is still challenging, but the issue of sufficiently staffing your hotel with qualified team members is easing

• An update from the Hotel Association of Canada highlighted successful advocacy initiatives that have led to government programs to mitigate the many barriers that continue to exist for immigrants and other new entrants seeking employment in Canada’s travel, tourism, and hospitality sectors

• Ne ver lose sight of making real investments in your people and fuelling their personal growth

Innsights

MODERATORS AND SPEAKERS:

Rob Kumer, president & chief investment officer, KingSett Capital

Brian Flood, executive vice president & practice leader, hospitality & gaming group, Canada, Cushman & Wakefield

Robin McLuskie, managing director | hotels, Colliers Hotels

Paul Morassutti, chairman, CBRE Canada

Tony Cohen, partner & executive vice president, Crescent Hotels & Resorts/president & CEO, Global Edge Investments (GEI)

Cindy Estis Green, CEO & co-founder, Kalibri Labs

Danièle Gadbois, vice president, global enterprise sales, CWT

Ally Wesson, vice president, marketing, Realstar Hospitality

Susie Grynol, president & CEO, Hotel Association of Canada

Sylvia Occhiuzzi, senior vice president, Beechwood Real Estate Advisors

David Donaldson, President, MasterBUILT Hotels

Jeff Hyslop, senior vice president, asset management & investment, InnVest Hotels

Farhan Kassam, president, Sterling Group Inc.

Sky McLean, CEO & owner, Basecamp Resorts Ltd. & Big Moose Realty

Lyle Hall, Hall Hospitality Advisors

Chip Ohlsson, EVP & chief development officer, Wyndham Hotels & Resorts

Mark Purcell, senior vice president, development, North & Central America, Accor

Noah Silverman, global development officer, US & Canada, Marriott International, Inc

Matthew Wehling, SVP development, U.S. & Canada, Hilton

With the keynote presentation from Neil Pasricha, “Happiness Expert” and the bestselling author of The Book of Awesome

THE INAUGURAL CHIC LIFETIME ACHIEVEMENT AWARD

This year’s program included the presentation of the inaugural CHIC Lifetime Achievement Award—given posthumously to Deepak Ruparell—and received by his family at the presentation.

Deepak Ruparell was an agile, reliable and brilliant colleague, mentor, friend and visionary and networker extraordinaire in Canada's hospitality industry.

This annual award is given in recognition of an individual who possesses extraordinary business acumen and has demonstrated remarkable long-term leadership success. Recipients are stakeholders who contribute to the overall vibrancy of the hotel industry as well as generous philanthropic efforts in the broader community.

THE MARKETPLACE

In addition to the plenary sessions, networking and social events, attendees were offered a marketplace of ideas, products and services from vendors and sponsors.

STAY Magazine is the official media partner and a proud sponsor of CHIC2023

HOTEL INTELLIGENCE DIRECTLY TO YOUR INBOX