Financial support, saving the summer among HAC priorities

OTTAWA — No one thought the pandemic would last this long; hotels were initially bracing for a couple of months. But now the hotel industry realizes that COVID-19 lasted a lot longer than expected and that group business and mass conferences will not be taking place in the near future.

“That makes leisure and tourist traffic really important this summer,” Susie Grynol, president and CEO of the Hotel Association of Canada, told CLN. “There’s a lot of anxiety about whether we will actually have a domestic summer.”

In the meantime, hoteliers are busy getting ready to reopen, investing in training, meeting public health requirements and implementing cleaning protocols. They are making sure they can open safely and hoping people will actually come and will actually travel.

“There’s a lot of frustration because Canada has such a conservative approach, not just to opening international borders, but also to opening domestic borders. While other countries have implemented bubbles and strong guidelines, there is a lack of clarity regarding what tourists can and cannot do,” Grynol said. “There is pent up demand out there; there are people who want to travel this summer, according to a number of different polls. They are just waiting for the green light.”

All of this is very disruptive. “While no one is suggesting we open unsafely, why not have more clarity and consistency among our provinces? We are out of step with other countries,” she added.

There are some positive signs, Grynol said. Hoteliers are excited to reopen, and new hotels are opening every day. “The worst is behind us, assuming there is no second wave. We reached rock bottom and are coming out the other side. There is still a lot of anxiety regarding the fall and the first and second quarter next year. Some occupancy will build this summer, but it will drop in the fall when business travel and convention business generally kick in. We will not see the [previous levels] of group and meeting business in Q4 and even into Q1 of next year.”

There might be some pickup on the leisure side, but not enough to substantially raise the national occupancy levels so that hotels break even. “We are bracing for a long and tough recovery,” Grynol said.

Hotels that are opening up are looking for at least 30 per cent occupancy to break even, but the national average is still in the low 20s, Grynol noted. “Assuming the numbers climb over the summer, we could see some hotels break even. Some provinces are open and some of the numbers are higher than 30 per cent, but there are a lot below 30 per cent as well. Some of the cleaning protocols require a 48-hour period between guests, and that will play into the overall picture as hotels open.”

The federal wage subsidy program is the most valuable measure the Canadian government has implemented. Initially it did not cover the whole sector, applying only to very small businesses, and it covered only 10 per cent of wages. Now it has expanded to include the entire industry, and it covers 75 per cent of the fixed cost of wages. “This is a very important program that will become even more important during the recovery. It has helped maintain the employer/employee relationship,” Grynol said, adding that HAC played an integral role in having it extended to the end of August, and is looking to extend it until the end of the year.

The federal Canadian Emergency Business Account (CEBA) program provides up to $40,000 per business, and it is forgivable. It’s intended for small businesses, but HAC helped get the government to push the definition so that each individual hotel could apply. Fifty per cent of hotels across Canada have taken advantage of this program.

But accessing liquidity is still a very significant problem for the industry, and Grynol is less enamoured of the larger federal loan program, the Business Credit Availability Program (BCAP). “This is not going well, with only 20 per cent uptake [by Canadian businesses] program-wide,” she said. “Now we are trying to fix it so that businesses that need it access can get access, reframing it so that it is more useful.” Some of the problems for applicants include requests for personal guarantees, the fact that the bank risk is only 20 per cent, and a long and cumbersome application progress. HAC is pushing for them to extend the repayment period; require payments for interest only; bring the interest rates down; and do away with the personal guarantee.

In addition to working to readjust this program and breaking down domestic barriers to travel, HAC is working to boost consumer confidence with its Safe Stay health and safety guidelines, which have been hugely successful for both consumers and the industry.

“At the end of the day, we need strong advocacy at all levels of government,” Grynol said. She applauded the recent announcement of $275 million in forgivable loans recently announced by the Quebec government, and urged provinces that can afford to do so to step forward with similar measures.

The federal government’s $70 million announced recently by Melanie Joly, federal Minister of Economic Development and Official Languages, goes towards domestic marketing, which is crucially important, although businesses can’t make the best of use the money unless they have clarity as to whether we can travel this summer, Grynol said.

The Hotel Association of Canada was one of the original members of the Canadian Travel & Tourism Round Table, which recently sent public letters to Prime Minister Justin Trudeau asking him to open up Canada for Canadian travel. “The group is very much alive and is doing very important work to break down barriers. The goal is to push Canada not to be overly constrained, but to follow public health guidelines. We can open up in a measured, safe way like other countries. Canada has been overly conservative.”