Canada - Victoria hotel slowdown extended

Victoria hotels had another weak month in October, meaning the region's hotels, motels and inns are now 3.30 per cent behind last year in terms of occupancy, according to figures released yesterday by Chemistry Consulting.

Victoria's hotels had an average occupancy of 59.6 per cent in October, down from 63.3 per cent the same month last year. That brings the year-to-date occupancy numbers to 65.5 per cent, down from 68.8 per cent last year.

Average room rates are also way off for the year, with the October average down $2 to $67.61 a night. The average rate over the first 10 months of the year was down $7.11, from $135.77 in 2008 to $128.66 this year.

"It's getting ugly," said hospitality industry consultant Frank Bourree of Chemistry Consulting. "Most tourism operators, including hotels, operate on pretty thin margins. And when you lose three to five per cent occupancy year over year, that's a big hit to the bottom line. When you start losing occupancy and start discounting rates, before you know it, the bottom lines have eroded pretty dramatically."

Bourree said that's led to some trouble in the industry with some hotel chains like Traveller's Inn, currently in receivership, facing extinction.

He suggested there are others close to the tipping point as well.

"There's a lot of guys in the middle that are really feeling squeezed," he said.

Rob Gialloreto, CEO of Tourism Victoria, said there were no surprises in the numbers for October.

"They aren't great. It's certainly [on par with what] we expected to see," he said, noting he has not heard if there are other hotels facing the prospect of seeking creditor protection. "But having said that, who knows?"

If there is a bright side to the October statistics, it has to be continued strong numbers from the Victoria Conference Centre, which had 41,865 delegate days in October, up from 33,156 that month in 2008. Year-to-date, the centre is 19.5 per cent ahead of last year.

Traffic at Victoria International Airport was down 2.4 per cent compared with last October and down 1.66 per cent year-to-date.

Ferry traffic was up 0.43 per cent in October to 146,667 vehicles, though passengers were down 1.91 per cent. Year-to-date vehicle traffic is up 2.26 per cent while passenger numbers are down 1.06 per cent.

Bus traffic on the ferries is down 18 per cent for the year after another drop of 15 per cent in October compared with last year.

Bourree said he doesn't expect much in the way of good news over Christmas and beyond either.

"I wish I could be more optimistic looking forward. We have a little blip for the Olympics where we should get some spillover, but next year doesn't look all that promising -- flat at best recovery," he said.

The industry will, however, be putting on its best face this week as it hosts the 22nd annual Canada's West Marketplace trade show until tomorrow.

The show brings together B.C. and Alberta tourism suppliers, along with tourism buyers from around the world, as a means for tourism businesses to promote their range of products to tour operators and wholesale representatives from Europe, Asia Pacific and the Americas.

By Andrew A. Duffy