A regional check on the impact of COVID‑19

By Colleen Isherwood, Editor

TORONTO — Colliers and CFO easily reached their capacity of 1,000 participants in their second industry webinar held April 16 at 1:30 p.m. Moderated by Mark Kay of CFO and Robin McLuskie of Colliers, this panel included HAC president and CEO Susie Grynol. Mandy Farmer of Accent Inns, which has eight properties in B.C.; Ryan Pomeroy of Pomeroy Lodging, whose 13 properties are in Alberta, B.C. and Alaska; Bertrand LeBoeuf from Le Groupe Daca in Quebec and Jeff Appleton of DP Murphy from Atlantic Canada.

Luckily, Mandy Farmer’s company, Accent Inns, is weathering the pandemic fairly well, Farmer said. “We only have two properties closed, five running and one under construction, with an average of 50 per cent occupancy, which really helps me sleep better.” Accent Inns has focused on its reputation — keeping employees safe and reaching out to the community. One of their managers had worked on a hospital ward and was a big help implementing “amazing emergency procedures, which I’d be happy to share,” she added. “Hotels have a vital role to play in being a safe place for people to shelter.

Farmer said her company is looking at the situation right here and right now — regarding how they can wrap their arms around all the health care and front line workers. They have partnered with United Way to raise money to house front line workers. In some communities, they are getting elementary schools to write thank you notes to put on the doors of the hotels. In Victoria, Accent Inns is offering one free meal for any health care workers. When all this is over, they want Accent Inns to be the first choice when they travel.

Ryan Pomeroy of Pomeroy Lodging divides his properties in to three groups; hotels in secondary and tertiary resource communities in northeastern B.C. and northwestern Alberta; their large resort property at Kananaskis; and hotels in larger centres that are further south such as Prince George and Kelowna, B.C. It’s been a different story for these groups of hotels. Essentially, they turned their executive team into a COVID Task Force on March 9, when they realized how serious the pandemic really was. Their properties in the oil patch were already reeling from the price drop in oil which began in 2016, and has been “twice as bad as the crash of global financial markets in 2008. “The Alberta economy was crawling back on its knees — it wasn’t on its feet yet,” when the pandemic hit. Members of the Pomeroy task force focused on fixed cost reduction, vendor relationships, labour at its various properties, government aid, customer relations, lender relationships, employee communications, and last but not least in-property project management — a look at new ways of doing everything from housekeeping to breakfast to allowing those in employee housing to continue to live there rent free.

Some the marketing and operational strategies Pomeroy Lodging is implementing include maintaining great relationships with their customers, many of whom are working on large oil and gas projects, pipelines and a hydroelectricity dam in Fort St. John. “We are hopeful the federal government will push large infrastructure spending throughout the country. One silver lining is that there are people who are wanting to get out of work camps. We are seeing some green shoots of business in our hotels because camps are just huge gathering places.” Pomeroy also continues to donate to charities. “People value humanity and strong core values,” Pomeroy said.

Resort marketing and staffing strategies are more local in focus. At Kananaskis, Pomeroy has revoked all summer job offers, wanting to put the people it has laid off back to work first. “We are reinventing food and beverage as one large department,” he added.

Bertrand LeBouef is president of Le Groupe Daca, which has more than 1,000 hotel rooms in Quebec. “Some of our hotels are closed and some are open,” he told webinar participants. “The ones that are closed are the ones that cater to the tourist market. “When we look to the business market, there’s not much.” He added that Groupe Daca is working with the CHSLD (residential and long-term care centres) to get doctors and nurses to come to their hotels. “We’re looking at hygiene for guests to protect both guests and employees. We’re doing cash flow analysis. We’re used to ramping up in difficult times. We will reopen and be stronger,” he said.

LeBoeuf said that in the Eastern market, companies have to look after what they already had. “Tourists will come back, as it sounds like the U.S. border will open soon. People won’t want to fly as much as drive.” LeBoeuf’s Montreal properties may benefit from the very low vacancy rate in the city’s residential markets. LeBoeuf said they are tapping this market with extended stay specials, including special rates on meals and other amenities. “We want to establish confidence with our guests and employees,” LeBoeuf said.

On the East Coast, Jeff Appleton, CEO of DP Murphy Hotels, said the news hit home around March 8th or 9th. “We had no playbook for this, but we did have cues from past events. We cut everything we could; we implemented new policies and procedures for cleaning.” They have nine out of 13 properties still open. “We’re heavily seasonal and we were starting at a 50 per cent [occupancy] market. The ones that are open are in the single digits.” Appleton said his company is focusing on service to the community and to their key clients. “We are using the time to keep engaged with our staff, and to make plans for when we push the green button. We are cultivating relationships with nursing home providers.” Appleton noted that the East Coast has not been as hard hit by COVID-19 as some areas of the country.

DP Murphy has 1,400 rooms, and the fact that many of their properties are in a resort market is a given. “We are optimistic that on May 15, we can attempt to start reopening, very gradually, with social distancing involved.”

Susie Grynol, president and CEO of the Hotel Association of Canada, said that the hotel industry was one of the first to be hit by COVID-19, and the first at the table with government, sounding the alarm bells “that we were about to hit an iceberg.” HAC formed a COVID Response Team subcommittee of its board of directors, and formulated a list of key asks to government three areas, i.e., employment, liquidity for owners and recovery. The biggest wins are the wage subsidy, deferral of the GST, expansions of the subsidy to small businesses, and a sizeable liquidity option. “Our immediate focus is on liquidity measures. We want government to make our sector a priority, and fine tuning [the measures] so that individual properties can apply.” The HAC wants to see forgivable portions of this relief, and government backing by 100 per cent, not the current 80 per cent. They are also working on legislation that would provide early income tax refunds.

Looking to the future and recovery

Asked about the recovery of convention business, Appleton noted that it is contingent on the broader economy and whether people will have the money to spend. “It’s an uphill climb for us, but we’ve been there before and we’ll do it again. when the coast is clear, we’ll be well coordinated. Pressing flesh is in our DNA. People are learning to communicate [virtually], but it’s not permanent.”

“We’ve seen dark days before, but we have to keep our focus to ensure there will be stimulus and relief packages for our industry. I remember 2009 like it was yesterday. It took two, three or four years before it all came back to where it was. It’s not three months, and not six months, as we’re getting pennies on the dollar.” Appleton predicts it will take until 2022 to get up to the levels of 80 per 90 per cent occupancy that they saw in 2019. “The industry is going through a rough patch, but this too will pass.”

“The world is waiting on the vaccine, the medication,” said LeBoeuf. “Tomorrow, if we go a vaccine, it would still take two months to get back to normal. The rest of this year, we will struggle to do what the government wants us to do and what is right for our hotels. In 2021, we will start building; and in 2022 we will be where we were before.”

Pomeroy noted that when the pandemic first started, he thought they would be shut down for two months, and then it would take a month to ramp up and they would be fine for the back half of the year. “That view is changing daily,” he told the webinar. “We’re expecting a longer, slower ramp up, with no significant group activities in 2020. The desire for human contact is greater than ever. I can’t wait until we get back to some of these events.”

Once the crisis is over, the hotel industry will suffer longer, Farmer said. “Some other companies are looking to repurpose hotels as condos or senior’s facilities. Will we have the revenue to pay our bills?” She foresees less business travel and the risk of future pandemics. “This one caught us off guard,” she said.

“The onus is on owners on holding rates,” McLuskie said. “ADR takes so long to recover.”