Hotel prices in downtown Toronto have skyrocketed, and as the busy tourist season winds down, industry experts say there’s no sign of them coming back down anytime soon.
Consumers are said to be paying significantly more due to a combination of factors.
“The prices are high for two reasons,” said Wayne Smith, a professor in the department of hospitality and tourism at Metropolitan University of Toronto.
“One of them is the cost of inflation, so as the cost of everything goes up, the cost of hotels goes up,” Smith told CBC Toronto.
“The second thing is wages,” he said.
Rising hotel prices in Toronto are being mirrored in cities across the province and the country. Statistics Canada said in July that prices for traveler accommodation in Canada rose 47.7 per cent in July compared to a year earlier, with prices in Ontario up 70 per cent.
Smith said some hotels are still not operating at 100 percent capacity because they are unable to hire enough staff.
“For the last two years, these hotels have not been profitable.” he said.
“They’re operating at a loss … so they’re also making up a little bit.”
The chief operating officer of the Annex Hotel, a small boutique hotel in downtown Toronto, said business has been steady since about May. He said his hotel also raised room rates.
“It’s a competitive market,” Ryan Killeen said.
“If your competitor is selling their rooms at $500, $600 and at high occupancy and you’re sold out, the Toronto market will follow suit and compete,” he added.
“It’s about balancing what’s considered a premium and what’s considered acceptable to your existing consumers.”
Killeen said the Annex Hotel is also making up for lost time, and while it is back at 100 percent capacity, he said support is still needed from various levels of government.
“It’s been a few years of extremely tough times that won’t just go away. The help that’s needed from here continues to build Toronto as a destination,” he said.
“The rates, when you compare them to other major North American cities, are still low, believe it or not,” said Tony Elenis, president and CEO of the Ontario Restaurant Hotel and Motel Association.
Elenis said that because the cost of building a hotel in downtown Toronto is so high, there is a shortage of rooms in lower and mid-range properties.
“If you look at downtown Toronto, there’s not enough room to possibly meet the demands of future growth.”
Although hotel operators say travel at this stage of the pandemic has taken a hit from the easing of public health measures, their revenue has been higher than in the past two years. But they warn that there is still some uncertainty, especially when it comes to business travel.
Smith says it’s the “bread and butter ingredient” for hotels, especially in big cities.
“If it doesn’t come back, they’re going to be in trouble.”
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