On March 1, Hew and Draw officially opened its doors for business. A minimalist boutique hotel and craft brewery in Corner Brook, N.L., the property had been in the works for more than three years and was starting strong. Rooms were about 70-per-cent booked for its first two months of operation – a major feat for a property launching in low season. Its first event, a St. Patrick’s Day party, was shaping up to be a success.
But two weeks later, the province announced its first case of COVID-19, and the hotel had to execute its worst-case-scenario plan: reducing the number of on-site staff, cancelling events and services, and closing its taproom, restaurant and retail space. By March 20, almost all existing reservations for the next few months had been cancelled and new bookings were non-existent.
“Comparing the first half of March to the latter, we saw an 80-per-cent reduction in revenue with no visible light at the end of the tunnel,” says Autumn Gale, Hew and Draw’s operations manager.
Canada’s hotel industry has been hit hard by the coronavirus crisis. The market was projected to see a 1.9-per-cent, or 9,000-room, increase in gross national supply this year – the highest jump since 2005, according to global hospitality consulting firm HVS. Now, across the country, occupancy rates are below 10 per cent – if that. In Montreal, the occupancy rate is functionally zero, while in Toronto, it’s in the single digits, a 95-per-cent decline from this time last year. It’s a devastating blow, and the outlook is particularly uncertain for brand new properties.
This spring alone was to have seen the opening of the OPUS Hotel Versante in Richmond, B.C., Canada’s second W hotel in Toronto’s Yorkville neighbourhood, and 1 Hotel, on King Street West. In Montreal, Hôtel Mile-End, a new boutique hotel by restaurateur Hubert Marsolais and modernist architect Henri Cleinge, was scheduled for a summer opening, while Canada’s first Ace hotel was to open in downtown Toronto in the fall. Dozens of other business, extended-stay, mid-range and budget hotels were also slated to open this year. All of these plans have been forced to change in some way.
In Whitehorse, the Raven Inn became the city’s first new hotel in 50 years when it officially opened its doors in mid-March. It too started strong: The property was fully booked for the Arctic Winter Games, which were set to run from March 15 to 21. But less than a week before the opening ceremonies, the event was cancelled, leaving most of the hotel’s 38 rooms empty. By March 22, when the territory announced its first two cases of the virus, business had not picked up, and now the Raven has closed temporarily, although the owners are hoping to start taking reservations again later this month.
In their attempt to weather the downturn, the owners of Hew and Draw have requested fee reductions from service providers and negotiated a hold on principal payments for its business loan. They’ve temporarily laid off 85 per cent of employees and closed one floor of guest suites. They have even consolidated the perishable items at its craft brewery to save on refrigeration costs.
For now, the Ace in Toronto is still going ahead with its planned fall opening, using this time to finalize construction, but according to Marriott’s website, the W’s opening has been pushed back to February, 2021. Ingrid Jarrett, president and chief executive of the BC Hotel Association, says that’s a more likely timeline for the new-builds in her province.
“The [hotels] that were scheduled to open this spring are completely delayed a year. Instead of moving three months forward, most of them are slated to wait until the spring of 2021. And the reason for that is, it’s anticipated that if domestic travel restrictions are removed, the industry is suggesting that we’ll get through the summer at about 30-per-cent occupancy.”
No one is expecting international restrictions to lift any time soon though, which means there won’t be enough business to justify adding new rooms to the current offerings.
Public-health concerns are also top of mind.
Mandy Farmer, president and CEO of Accent Inns and Hotel Zed, two small hotel chains in British Columbia, had planned to open an outpost of Hotel Zed in Tofino, B.C., this summer, making her the surfing town’s first female hotelier. But while construction continues, it won’t accept guests until travel is allowed again. “Tofino is a small, isolated community, and I would not do anything that risks putting pressure on their health care system,” Farmer says.
Hotels will need more than deferrals, loans and wage subsidies to make it through, Jarrett says, especially because many do not qualify for those stimulus programs. In the meantime, properties are shifting their focus to front-line health care workers (renting at rooms at low rates), rejigging check-in processes to make them contactless and doing what they can to survive by cutting costs and, in Hew and Draw’s case, offering online ordering and curbside pickup for its craft beer.
“In this situation, no reduction is too small, and all ideas are being taken seriously to reduce our costs and keep our doors open,” Gale says.
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