Most hotel operators face insolvency if pandemic subsidies are not extended to end of 2021

Susie Grynol, CEO of the Hotel Association, in an April 30 testimony at the Senate national finance committee said many operators will not recover from pandemic lockdowns that saw a 98 percent decline in cross-border traffic. “There will be some carnage and there already has been,” said Grynol.

“Some will not make the recovery,” the Hotel Association of Canada wrote in a written submission to the committee. “The Association’s latest member survey from May revealed [most] hotel operators will go out of business if Canada Emergency Rent Subsidies and Canada Emergency Wage Subsidies are not extended to the end of 2021.”

Grynol in earlier testimony at the Commons industry committee last August 10 said prior to payment of rent and wage subsidies, insurers had threatened hotelkeepers they would be denied coverage “because we’re too much of a risk.”

“You can’t run a hotel without commercial insurance,” she said. “It is a huge issue.”

The Association said among provinces hotel occupancy rates were as low as 24 percent, in New Brunswick. Among larger cities, occupancy rates were as low as 24 percent in Montréal.

The lobby group said data suggest hotel operators will not regain pre-pandemic revenues until 2024. “Restrictions to stop the spread of COVID-19 have had an immense impact on hotels in Canada,” wrote the Association, who added: “The impacts were not uniform.”

Grynol advocated a transition to the fall because the border opening will likely coincide with colder weather when Canadians go south in droves than spend on domestic travel. With no events or conventions to attend, business travelers will be less likely to make bookings with Canadian hotels at pre-pandemic levels.

“Because restrictions on domestic and international travel have subdued hotel demand, hoteliers know cutting rates is unlikely to generate demand,” the Association said. “It is important to note there is a risk once the border between the U.S. and Canada reopens this could draw more Canadians to the south.”

“It means our hotel owners who operate predominantly small businesses, family-run in many cases, who operate the local hotel will lose their life savings,” said Grynol. Loss of business travel with teleconferences and Zoom calls will also cost revenue in future years, she added.