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May 2005 Travel Newsletter

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  • Canadian travel news
    American passport rules may be another tourism barrier
    Relocating CTC "ill-conceived and politically motivated"
    Canadian RevPAR
  • International travel news
    U.S. dollar decline trouble for Canadian tourism
    Weakened U.S. dollar a boon to U.S. tourism
    Hotel values on the rise
    Vacation costs up 5% this year
  • Internet info
    Visitor traffic
  • Advice for the property owner
    Rental accommodation should lead in technology not follow

Canadian travel news

American passport rules may be another tourism barrier
The potential impact of the U.S. Western Hemisphere Travel Initiative (WHTI) is looming large for tourism stakeholders in Canada, as the implications on inbound tourism from the U.S. begin to make themselves clear.
Simply put, Canada's tourism sector is facing a possible plunge in U.S. arrivals after the WHTI's passport policies officially take effect in January 2008. And there's no time like the present for the industry to start considering its options.
Consider the facts: the U.S. has passed an act that will enforce the requirement of passports on those foreign nationals - primarily Canadians and Mexicans - who have until now enjoyed an open border with America. The Canadian government has said it will probably respond in kind, meaning that Americans will also be expected to have a passport for entry to Canada.
Both countries stand to suffer through the new restrictions, and the "rubber tire" arrivals in particular will be impacted. But the picture for Canada's tourism industry darkens more when considering the vital role that Americans play in the overall tourism count. Destinations like Whistler, for instance, rely on U.S. travellers for a high percentage of their business - especially those that arrive by car.

The crux of the matter is that most Americans don't have passports. Only some 23% of the U.S. population has passports, compared to about 50% of Canadians, says Tony Pollard, president of the Hotel Association of Canada. Canadian tourism arrivals from the U.S. are already down, with U.S. stays of at least one night declining 12% in 2004 versus 2002, said Pollard. The new U.S. and Canada passport requirements will be "a major blow" unless solutions can be found and implemented, he said.
Would the U.S. make changes to the initiative? Not likely, but "never say never," is Pollard's take. "This is all a result of 9/11 and the reality is that the U.S. is at war... it's up to us to do a better job of telling the Americans about these changes."
Echoing those concerns were industry leaders across the country, including Randy Williams, the president of the Tourism Industry Association of Canada. "We're polling our members to determine the impact they think this will have on them, and getting their ideas for solutions," says Williams. "We still have 2½ years to adjust our strategies, but we are very concerned," he said, indicating that cross-border destinations in particular (Canadian casinos for instance) would be hardest hit.
"This is a troubling situation and we are very concerned," said Rod Harris, president of Tourism BC. "We realize that this will be a possible deterrent to American tourist traffic entering Canada, but we don't yet know the degree to which it will affect us." One bright note - a U.S. passport has a 10-year validity period, versus 5 years for Canada.
The new US regulations do not come into effect immediately, and should in theory have no impact on tourism travel between Canada and the US in 2005.
Meanwhile, U.S. President George W. Bush has ordered a review of these new regulations saying he feared massive disruption of traffic across the border. "If people have to have a passport, it's going to disrupt the honest flow of traffic.

Relocating CTC "ill-conceived and politically motivated"
"Spending millions of dollars to uproot and relocate Canada's national tourism marketing organization cannot be justified at a time when the tourism industry is still reeling from the lingering effects of SARS, the ongoing war in Iraq, border crossing delays, escalating gas prices and a surging Canadian dollar" said Lou Seiler, Chairman of the Tourism Federation of Ontario.
"We need to be spending money promoting this country's tourism assets more effectively, not wasting money on ill-conceived and politically motivated endeavours," added Seiler. "The CTC should remain in Ottawa in close proximity to the other key national tourism bodies and the seat of government. Tourism is a $52 billion industry that impacts all regions of Canada and it should be centrally anchored in the nation's capital".
The Tourism Federation of Ontario is an umbrella organization for 26 major not-for-profit associations serving Ontario's tourism industry.

Canadian RevPAR
Latest lodging report (week ending April 30th) from the Canadian hotel industry showing 'revenue per available room' (RevPAR*).

Province RevPAR*
Alberta $64.88
British Columbia $60.09
Manitoba $54.48
New Brunswick $48.00
Newfoundland & Lab. $63.51
Nova Scotia $58.59
Ontario $75.20
Prince Edward Island $22.16
Quebec $77.07
Saskatchewan $58.06
Canada $55.84

*RevPAR is typically defined as room revenue divided by rooms available.

International travel news

U.S. dollar decline trouble for Canadian tourism
The percentage of adult Americans who have taken at least one overnight trip of more than 75 miles from home has risen to the highest level observed since 1999 according to the 2005 National Leisure Travel Monitor.
According to this closely-watched barometer of the travel habits, preferences and intentions of Americans, fully 58% of American adults took such a trip during the past 12 months (up from 49% last year), of which one third took at least one trip primarily for business and 93% took at least one trip primarily for pleasure.
Of major concern to the Canadian tourism industry is the finding that "60% say they are less likely to take an international trip in the year ahead if the U.S. dollar continues to decline against other major world currencies".
Among other things, the survey revealed:

  • 68% of adults took at least one leisure trip with a spouse or another adult, while 37% took at least one trip with children (a significant increase from the percentage observed last year), and fully 26% took at least one vacation alone;
  • Weekend vacations (4 nights or less including a Saturday) reign as the most popular and now represent 56% of all vacations taken by Americans, although there has been an increase in the incidence of vacations lasting more than five nights;
  • 30% of adults are planning to take fewer vacations in the year ahead (roughly equivalent to the percentage observed last year), and "not able to get away from my job/work" is the most frequently cited reason why;
  • Trips that include a naturalistic element remain very popular, with the incidence of beach/lake vacations rising significantly over the previous year (cited by an estimated 27% of leisure travelers, up from 21% last year);
  • The Internet is now used exclusively for vacation planning purposes by 56% of all leisure travelers, whereas 23% consult both travel agents and the Internet and 10% rely exclusively on travel agents;
  • 46% of active leisure travelers are interested in taking a cruise, and 10% are interesting in purchasing a timeshare or owning vacation time.

Weakened U.S. dollar a boon to U.S. tourism
"Thank God we've had the weakened dollar," said Dexter Koehl, a spokesman for the Travel Industry Association of America, which promotes tourism within the United States.
Travel to the U.S. had declined sharply because of disdain for American foreign policy, security hurdles and intense competition by other countries to attract visitors, he said. "Happily, the favourable exchange rate has trumped all those concerns," Koehl said. A total of 46.1 million foreigners visited the United States in 2004, up 12% from 2003's 41.2 million. About 43.5 million visited in 2002, 46.9 million in 2001 and 51.2 million in 2000.

Hotel values on the rise
U.S. hotel owners and investors are currently riding on the steep, upward-sloping part of a roller coaster ride, not exactly knowing how fast or frightening the next downward slope will be, yet not forgetting the last scary and sustained downward spiral from 2001 through 2003.
The good news is that the current position of U.S. hotel values on the upward slope is unmistakable:
In 2004, the average value increased 7.8% to US$79,358 per guestroom, the largest annual value increase the industry has seen since the 1990s.
With positive indicators such as a 3.7% gross domestic product (GDP) growth rate projected for 2005, the Penn State Index of Hotel Values projects an even greater value increase of 8.5% in 2005. Another 7.8% increase in hotel values is expected in 2006. The other good news is that this year, the average hotel value should be at its highest point ever, surpassing the previous peak value seen 5 years ago, in 2000.
But then again, averages don't explain all hotel types.
Midscale hotels without food & beverage outlets, the current darlings of many hotel owners and investors, actually returned to their pre-2001 values last year, demonstrating the great popularity of this property type in the transaction marketplace.
On the other hand, luxury hotels, (e.g., Four Seasons and Ritz Carlton), and upper upscale hotels, (e.g., Hyatt and Westin), are not expected to return to their 2000 value highs until 2006.
All other hotel types, including upscale, midscale with food & beverage, and economy hotels, fall pretty close to the average and are projected to return to their record 2000 values this year.

Vacation costs up 5% this year
Gas prices aren't the only expense increasing for vacation travelers this year. AAA's annual vacation costs survey reveals lodging and dining costs have increased a combined average of 5% since last year.
AAA's survey shows that a family of 2 adults and 2 children can expect to pay an average of US$247 per day for food and lodging. Lodging rates will average US$129 a night, up 3.9% from last year. Meals will cost US$118, up 6.5%.

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Internet info

Visitor traffic to holiday homes.canada web site for the month of April 2005:
Total 'hits' for the month = 119,947 hits (3,998 per day)
Total 'unique visits' for the month = 9,189 (306 per day)
Visitors came from 70+ countries.
For more information, including an independent audit of our site performance, and to view the countries of origin for visitors click here.

Advice for the property owner

Rental accommodation should lead in technology not follow
Lodging is trying to stay competitive and keep up with customers who have poured money into their homes to upgrade features they also expect in rental accommodation. Compare the amenities in your guestrooms to what the typical guest has at home. Most travellers enjoy a guestroom more modern and plush than their own bedroom. Most hotels deliver designer bedding, five-fixture bathrooms and high thread count linens. But in technological capability, the vast majority of hotels fall far short of the home and office the traveller comes from.
Consider these technologies:

  • Radios/audio systems - Units developed specifically for hotels now provide automatic reset and allow travelers to plug in their IPod or other portable audio device and listen through a high quality, volume controlled sound system.
  • Television - Flat screens, high-definition television and other digital standards are becoming increasingly popular in the home. Now that Wal-Mart offers relatively inexpensive HDTVs, it's time to consider upgrades during the next set replacement cycle.
  • TV content - Along with better picture and sound, guests expect more selections, both free and pay-per-view. Travellers with 100-plus channels at home, an "on demand" capability for movies and TV shows, and more premium channels, have been known to question a property's star rating when flipping through only 14 channels and a choice of a dozen movies.
  • Telephone - Businesses and homes are gradually moving to Voice over Internet Protocol (VoIP) phones. There are currently few advantages to VoIP phones, but as software is developed for them, they will become "mini-computers" as well as phones. Guest-specific phone directories, room service menus, hotel services, even basic information services will be facilitated with VoIP.

While such technologies may not be as important as a clean room or a comfortable bed, they are clearly becoming more critical to customer-buying behavior.
As they improve and converge to digital platforms, it is important to consider the big picture of technology and avoid a piecemeal approach.
For rental accommodation to prosper, they should continue to lead the consumer, not follow. That leadership must extend beyond bed and bath to entertainment and amenities that not only allow business and leisure travellers to be highly productive during their stay but also indulge themselves.

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