BANFF – Hoteliers in Banff and Lake Louise lost close to half a billion dollars in room rate revenue during the height of the COVID-19 pandemic.
That’s according to an administrative report presented to Banff town council on Monday (Feb. 27) that looked at hotel occupancy, total rooms sold, average daily room rates, total monthly room revenue and total revenue loss.
Town of Banff officials say the biggest estimated monthly room revenue loss between March 2020 to February 2022 was in July 2020 when revenues were about $50 million below July 2019 levels, and that the total accumulated loss in room revenues for the two-year period was over $534 million.
“The total loss was a shock to me. I knew it was bad, but I didn’t realize it was this bad,” said Chris Hughes, the director of corporate services for the Town of Banff.
“Even though we are back to 2019 levels, this is a significant hole that they are digging out from… we were uniquely impacted by COVID here because of our single industry.”
Using 2019 as the base year, which had been one of the strongest tourism years on record in Banff National Park before the pandemic hit, Town administration did a rough calculation of the total amount of revenue lost for the two-year period of March 2020 to February 2022.
Assuming that the total room revenue would have matched 2019 levels, they measured the revenue impact of COVID on the accommodation sector based on key monthly metrics provided by Banff and Lake Louise Hospitality Association (BLLHA).
“The numbers are staggering,” said Coun. Barb Pelham.
Coun. Hugh Pettigrew concurred, but added he was particularly concerned given the 11.6 per cent municipal tax increase businesses and residents are facing this year.
“I am also shocked to see those numbers,” he said. “In a year that we’re increasing taxes greatly, that’s quite a mountain for our businesses and everyone to come from.”
Wanda Bogdane, BLLHA’s executive director, said this data helps tell the tale of the long road to full recovery that lies ahead for local tourism operators, clearly demonstrated through the $534 million in losses that hit Banff’s hotel industry through the pandemic.
“If we fold the impacts that restaurants, attractions, events, transportation and all of the other corners of our tourism ecosystem suffered into this equation, it gives local context on Destination Canada’s forecasts that do not foresee a return to pre-pandemic levels until at least 2025,” she said.
“This is why the industry needs more than one or two stronger summers to get back on its feet.”
The report also shows the average daily room rates for hotels for the month, which typically are lower in slower shoulder seasons of October to April and peak in summer when visitation to Banff is highest.
Similar to a trend with hotel occupancy, there was a sharp drop off in average daily rates in April and May 2020, dipping below $100 per night for a while, with partial recovery in 2021, peaking at between $200 and $300 that summer.
Hughes said for all months in 2022, the average daily rate was higher than in 2019, and for the year, was 20 per cent higher than pre-pandemic 2019, noting the average daily room rate peaked at $525 in summer 2022.
“Part of that is supply and demand because we had fewer rooms available and when supply drops, often cost goes up so you’ll see an increase in rates,” he said.
“Also, expenses increased so businesses increase their rates in order to match their revenues to their expenses.”
According to the report, total monthly revenue in 2020 was only 34 per cent of 2019, recovering to 47 percent in 2021. In 2022, total monthly room revenues were three per cent above 2019 numbers, peaking at $70 million in July.
“If you look at total monthly room revenue as a measure of economic prosperity, based on this, we are back to where we were pre-pandemic,” said Hughes.
“It matches almost identically each month of the year with the exception of January.”
In terms of hotel occupancy, January and February 2020 were trending very near to 2019 before the pandemic hit mid-March.
According to the report, average hotel occupancy for June-December 2020 was about half of what it was for the same period in 2019.
“In 2019, we had occupancy in January of just under 60 per cent, and peaked out at 90 per cent and then back down to around 50 per cent for December,” said Hughes.
“In 2020, it was all looking rosy, with very similar occupancy until February. Then, we basically shut the town down, the travel industry basically shut down and occupancy went nearly to zero for two months.”
Occupancy in 2021 continued to recover, however, the average level of occupancy for the year was only 58 per cent of 2019 occupancy. By March 2022, occupancy levels started to trend very near 2019 levels, recovering to 94 per cent of 2019 levels for the year overall.
“The year started out in January and February 2022 still below 2019 levels, but by March-April it was very, very close to what we saw in terms of occupancy from 2019,” said Hughes.
“At the end of year, December was higher than 2019 levels.”
The total number of rooms available during a month was also measured. In 2019, the average number of available rooms was 4,568, dropping each year since then to an average of 3,755 rooms in 2022.
Hughes said a main driver in this was the decision of many hotel owners to redevelop their properties over the past three years.
“Inns of Banff, Swiss Village, the Voyageur, and whole floors at the Banff Springs were taken off-line and were not available because they were being redeveloped, but they will be coming back online shortly,” he said.
“There were also some other market influences in terms of labour availability, so properties making a decision to consciously not sell rooms because they didn’t have the workforce to service them, or they wanted to create more space and have fewer people to make their properties more safe during COVID.”