A typical seasonal bump in hotel prices is being driven higher this summer by a boost in demand and inflationary pressures, experts say.
And one hospitality union says the workers on the ground deserve to reap some of the rewards of a re-surging travel industry.
The commercial real estate services CBRE Canada forecasted in April that the average daily rate of a hotel room in the GTA will reach $212 by the end of 2023. STR Global, which provides industry insights and data, says the latest 28-day average, ending May 20, is $259.53 — a 25 per cent increase from 2019.
Looking ahead to the summer months, a cursory search of popular travel sites like Trivago and Expedia for rooms in downtown Toronto on the July 8 and 9 weekend, for example, returns a list of steep prices — many around or well over $500 a night.
‘Perfect storm’ driving up prices
Wayne Smith, the interim director of Toronto Metropolitan University’s department of hospitality and tourism management, said there’s a “perfect storm” of factors combining to drive up prices. Those factors include a rise in demand, inflationary pressures and an effort to recover from the downturn of the pandemic.
“They’re trying to recover and what’s happening is they’re recovering through the price structure. So what you’re seeing is a much bigger increase.”
David Sanders, an organizer with the Toronto Hospitality Employees Union, which represents workers at the Fairmont Royal York hotel, said he hopes the spell of good business for hotels will result in gains for employees too.
“We’re, obviously, as people who work in the industry, happy when the industry does well,” he said. “But we feel that the industry needs to share that experience with the people [who] make it possible.”
Increase more like a stabilization, say one hotelier
Ryan Killeen, chief operating officer of the Annex Hotel, a boutique property in downtown Toronto, said boosting prices to recover from pandemic losses was not a part of their strategy.
Prices might be higher than they were before the pandemic but once costs driven by inflation are taken into account, it’s more like a return to normal than an increase, he said.
“Since the beginning of time or since the hotel industry has been around, prices have continuously increased year over year, but so does cost,” Killeen said.
The Annex Hotel is mostly feeling inflation through day-to-day purchases of goods and services, he said, like food and laundry cleaning costs.
Killeen said when comparing prices to last summer, there’s less fluctuation between days of the week. Previously, prices would drop drastically throughout the weekdays, he said.
“But with that return to attendance at conferences, trade shows, etcetera, it’s more consistent. There is a demand for rooms seven days of the week,” he said.
He said in contrast to last summer, bookings for this season were made far in advance, unlike the last-minute bookings of 2022. That means people who are looking for last-minute bookings this summer may be surprised by a lack of availability, he said.
Smith said booking in advance is one way to ease the sticker shock of booking a hotel, which many people may be experiencing after deciding to travel for the first time since 2019.
While rates might be beyond what most people are used to, Toronto is still a fairly discount city compared to its North American competitors said Nicole Nguyen, senior vice president at CBRE Hotels.
“But Boston, Chicago used to be farther ahead of us quite significantly and we’ve really closed that gap,” she said.
Workers struggling with inflation
Sanders said during the dark days of the pandemic, there was a discussion within the industry that things would improve when the business picked up again.
But he said if anything, things for workers have gotten worse and that wages have not increased at the pace of inflation.
“Effectively everyone received a pay cut and it became very, very difficult for hotel workers in the city,” he said.
He said it’s great to see business and tourism returning to downtown Toronto and now hopes workers will see some of those returns too.
“Now should be a time where the entire industry together can move forward and that’s what we’re hoping will happen.”
