Rising Rates


It’s been a rough ride for the hotel industry in the past 18 months, but it looks like the worst of the recession is over. Naysayers who would beg to differ can perhaps take some solace from the fact that a Hotel Price Index (HPI) report released in mid-September by the travel website hotels.ca, a division of Hotels.com worldwide, shows Canadian hotels are posting among the biggest rate increases of any hotels in the world. In fact, Canadian cities dominated the Top 10 ranking for the first time. Why the big increase? According to the report, “this is a reflection of the impact of exchange rates. Canadians felt the impact of gradually rising prices as hoteliers saw demand rise and cut the depth of the discounts they offered travellers.”

With Canadian hotel rates typically lower than many other countries, and a strong reluctance on the part of most hoteliers to increase rates — especially during a downturn — the findings are quite surprising. But, according to the HPI, Montreal, Vancouver and Toronto saw the biggest Canadian increases in hotel room prices (behind Singapore, which showed the largest year-over-year increase at 10 per cent). Montreal posted a seven per cent hike, bringing its average rate to $145 per night in the second quarter of 2010, followed by Vancouver at $147 per night, up four per cent; Toronto tied for third place with a four per cent increase to $133 per night, compared to $128 last year.

While Toronto showed the lowest increase of the three major Canadian cities, it remains the preferred destination for leisure and business travel, followed by Montreal, Vancouver, Niagara Falls and Edmonton. Vancouver remains the top domestic city for international travellers. Other Canadian cities, including Mont Tremblant, Lake Louise, Whistler, Jasper and Banff, top the list of more expensive destinations for domestic travellers. On the flip side, when it comes to travelling outside the Great White North, Las Vegas topped Canadians’ list of top international destinations — ahead of New York, London, San Francisco and Seattle.

The report also shows it’s become very attractive for Canadian travellers to take overseas trips during the last two years, thanks to a strong loonie. “Canadian travellers cut their average hotel room spend in every major country destination when compared with the amounts they spent in the same time period last year,” reads the report.

On average, hotel room rates increased by two per cent globally in the second quarter of 2010, but the amount Canadians had to spend on hotel rooms in every major country destination was reduced during that same period. This is especially true across Europe, where the Canadian dollar has risen against the Euro. “In some cases, the actual price in Euros at the hotels may have increased slightly but the strong buying power of the Canadian dollar made it more affordable this year for Canadians to maintain the quality of their accommodation,” said David Roche, president of Hotels.com worldwide. “There may have never been a better time for Canadians to travel to European cities.”

Despite the increases, hotel room rates are markedly lower than the rate at the peak of the market; on a global perspective, prices are now back to 2004 levels.

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