From bad to worse, Alberta hoteliers persevere

EDMONTON — During a week when oil prices plummeted into negative territory and Calgary cancelled this year’s iconic stampede, CLN spoke with Dave Kaiser, president and CEO of the Alberta Hotel & Lodging Association, about the situation in the province now that COVID-19 has devastated an economy that was already reeling from a number of years of low oil prices.

“It’s just devastating to say the least,” Kaiser told CLN. “I’ve never seen anything like it. The industry was not in great shape going in [to the pandemic] outside of the resort areas. We’ve had a tough four or five years. In 2019, revenues were down from the year before, and in the first few months of 2020, they were down from 2019. That put us in a very vulnerable position. I’m not sure the rest of the country appreciates how tough it’s been.”

Kaiser gave the example of a small hotel owner in Northern Alberta who was of retirement age and wanted to sell. A number of years ago he would have got $5 million for his property, but last year the operator saw just $129,000 in room revenue. “That’s what it’s been like for a lot of people,” Kaiser said. As an industry, numbers were already bad and profitability was non-existent. “And now this,” he added.

Back in March, AHLA initiated “roll call,” a survey of hotels to find out how they are doing. By having hotels share their data, they can help AHLA tell the story of how the COVID-19 crisis is impacting their businesses. AHLA used their own member database, plus all the properties registered under WCB industry code for the Alberta Hospitality Safety Association, which AHLA took over recently. This meant the survey was sent out to more than 1,000 hotels. “This enables us to communicate with all the properties In the midst of this unprecedented crisis,” Kaiser said.

Almost 400 hotels have replied to the AHLA’s Roll Call, with more hotels responding for each of the four times the survey has been sent out. The survey results released April 9, prove the devastating impact of the COVID-19 pandemic on Alberta’s economy. Roll Call data represents 50 per cent of hotel rooms from 90 communities, from small owner-operated motels to world-class resorts. Based on this, the AHLA projects:

• More than 50,000 guest rooms in Alberta have gone dark.
• More than 90 per cent of people working in Alberta’s hotel industry have lost their jobs.
• More than 90 hotels, including some of the largest in the province, have closed their doors.

“We currently have 91 hotels completely closed, but that changes every day,” said Kaiser. “And 85 to 93 per cent of employees have been laid off. Ultimately, there are a lot of hotels that are only partially open, with more than 58 per cent of rooms actually closed.

“This is helpful information that we are sharing with government. We have regular meetings with the Alberta Ministry of Economic Development, Trade and Tourism, and [the numbers] go up through the government to help assess the impact.” AHLA got in early with the labour information, which helped convince the government to extend the temporary layoff from 60 to 120 days. “This is positive because it gives hotels more time to recall their employees. Liquidity is hotels’ biggest concern.

“When you say that 90 per cent of staff have been laid off really early [in the pandemic], it means the situation is super serious. What it really means is we don’t have any customers. Our business dried up with the travel restrictions over the course of a few days, when we went from wherever we were to falling off a cliff. It didn’t take long.”

Kaiser added that in the shutdown environment, nothing is happening. There’s a little bit of life around airports or in rural areas, if there is some critical infrastructure, but there’s not a lot else.

At the same time, AHLA is working with other provinces and the HAC to provide information on how to access relief efforts. AHLA’s priorities over the short term are to do whatever they can do to support the industry. That involves government relations with the provinces and HAC, communications projects and managing their own affairs.

In the long term, they will try to determine what the aftermath will look like. “We may repurpose some hotel assets,” said Kaiser. “We have overbuilt and have too much inventory in many areas. Our fortunes have fallen and risen with the energy sector. Tourism areas are not overbuilt because we couldn’t in places like Banff and Jasper. In regional markets, there are places where a number of hotels were built in the last five years because of the energy sector. There may be opportunities to repurpose these for social housing or affordable seniors housing, as a way to get a return on investment while accomplishing other goals. We need to have a better supply and demand equilibrium,” Kaiser said.

There are some good news stories coming out of the pandemic. “A lot of properties have expressed interest in housing folks needing isolation. This speaks to the nature of our industry. It’s like the fires in Fort McMurray a few years ago, where hotels opened their doors and helped people, providing them with complimentary services. There’s a willingness to work with government — our members have really stepped up.”

AHLA has decided to put the Aspire conference on hold for this year, and is looking at virtual options for the Ascend conference scheduled for September in Kananaskis.

“We’re seeing what is probably the strongest engagement with the association that I can recall. That’s the importance of an industry association. We provide a strong voice, and that never matters more than in a situation like this. Our newsletter has the highest open rate ever, and we’ve made phone calls to a couple hundred members, that are very welcome. They want to talk and share their stories and messages. At the end of the day, we want to recognize and support the need for recovery.”