Accommodation

From 1998 to 2002, the GDP of the Canadian accommodation industry increased at an average annual rate of 2.2%, compared with 4.0% for the overall economy. Much of the accommodation industry is fueled by tourism. In 2001, tourism in Canada was marked by a slowdown in economic activity and was scarred by the effects of the events of September 11.

The number of international travellers in Canada dropped in 2001. Room occupancy rates for hotel and motels were adversely affected, particularly in the last quarter of the year. Nevertheless, the industry as a whole maintained a respectable profit margin of 12.2% in 2001, down slightly from 12.7% in 2000.

In 2002, the threat to global security continued to affect tourism, as did an economic slowdown. More tourists opted for familiar destinations and chose to travel by land rather than by air. Long haul airlines and hotels located near airports faced difficulties.

Although some pockets in the tourism sector were harder hit than others, the traveller accommodation industry as a whole saw increases in revenues and again maintained healthy profits in 2002. The accommodation industry’s 16,400 establishments generated $12.8 billion in operating revenues in 2002. In current dollars, this marked growth of 4.9% over 2001.

In the eastern provinces, the accommodation industry enjoyed strong double-digit operating profit margins in 2002. They also posted increased operating revenues, revenues per available room and occupancy rates compared to the previous year. This can be attributed, in part, to a hot, dry summer with perfect weekend weather through the season and to a warm September. In addition, heightened marketing initiatives in the Atlantic provinces helped to promote tourism.

Such success was not to be had in most of Western Canada, where the industry saw only moderate growth in revenues. This can partly be explained by an overall decrease in their share of accommodation revenues from foreign visitors. Among the world’s top tourism spenders are the Americans, Germans and Japanese, all of whom were affected by slowdowns in their economies and uncertainty in global security.

The weather undoubtedly also hurt accommodation revenues in the West. Occupancy rates dropped in Saskatchewan and Alberta, which suffered through a devastating prairie drought in 2002. Moreover, the late start to winter in British Columbia with a lack of snow in December resulted in hotel cancellations.