Victoria’s hotel operators are bracing for a lean winter.
With travel significantly reduced by the COVID-19 pandemic, it’s been a rough year for tourism businesses and hotels especially, which have reported occupancy levels of about 35 per cent through the first eight months of this year. Last year, it was an average of 75 per cent.
But most hoteliers are prepared to hold on through the fall and winter rather than close their doors again, as many did early in the pandemic.
“It is a possibility that some of the largest hotels, with the most structural expense, may shut down for a short period of time, but there are costs associated with winding down and starting up again,” said Paul Nursey, chief executive of Destination Greater Victoria. “I think most will try and limp through.”
Nursey said the large hotels in particular are vulnerable because they rely on more than just leisure travel, which did provide some business this summer as Canadians opted to explore the country.
The larger hotels won’t return to profitability until they can return to hosting conferences, he said. “They rely on catering, food and beverage, room rental, audio-visual rental and rooms.
“They are adapting and doing smaller meetings. They are doing the best they can, but their business model is structurally dependent on conferences.”
Reid James, general manager of the Hotel Grand Pacific, one of the largest hotels in the city, said they are ready for a very lean fall with only a small amount of meeting business.
The hotel has only been operating its east tower, after shutting down the west tower to save money.
Bill Lewis, general manger of the Magnolia Hotel and chairman of the Hotel Association of Greater Victoria, said hoteliers are doing the best they can, considering revenue is down by at least 50 per cent across the board.
Lewis said from what he’s hearing, there are no plans for hotels to start shutting down, but that could change depending on travel patterns through the fall.
“Business travel is almost non-existent and normally that’s what we rely on, that and conferences,” he said, noting the only way to get through to next spring and summer is to run as lean an operation as possible and have all hands on deck. “It means people wearing a lot of hats and managers on the floor – and that’s the case at every hotel right now.”
James said like many other hotels, the Hotel Grand Pacific has seen last-minute bookings, mostly on weekends, from Canadian travellers looking for an escape.
“It’s been like that all summer long,” he said, adding the hotel has had some success with incentives such as cut rates, $75 Visa gift cards and food and beverage credits.
Some travellers still found rates of about $200 a night too expensive, but Lewis said most probably had no idea that the rooms they were spending $200 to $250 a night on were nearly $400 a night last year.
James said when the big hotels start pricing close to $150 a night, they are not making a profit, especially when the added expenses of hand sanitizer and other protective gear required around the hotel are taken into account.
He said his hotel has no plans to close this winter, but any success will be tied to what the federal government does over the next few months with the wage subsidy.
“Right now, we don’t know what the percentage will be in December,” he said, adding he would love to know what it looks like going into 2021 so he can plan.
“The wage subsidy helps me keep the pool, gym and food and beverage outlets open, which helps me attract overnight guests,” he said. “Right now, we are doing everything we can to stay open, even if it’s just a small number of rooms per night.”
Nursey said the reality for hotels right now is surviving and mitigating losses until the conference business returns.
To that end, a campaign targeting the 5.7 million Canadians who take an annual winter trip to sunnier climes is in the planning stages.
“We will do what we can, roll whatever pennies we can get together to do a campaign to position Victoria as the best place for Canadians to do a winter vacation,” he said. “It may help mitigate some of the problems, but it won’t solve them.”