OTTAWA – The accommodation services subsector generated $23.6 billion in operating revenue in 2019, up 4.7% from 2018. Ontario (29.5%) accounted for the largest share of revenue, followed by British Columbia (21.6%), Alberta (18.6%) and Quebec (15.8%). Prior to the COVID-19 pandemic, the accommodation services subsector benefitted from a favourable exchange rate in many international markets and an increasing number of international travellers.
Similarly, operating expenses rose to $20.9 billion in 2019, up 5.3% from 2018. Salaries, wages, commissions and benefits (31.6%) contributed the most to expenses, followed by the cost of goods sold (15.0%)—primarily food products and alcoholic beverages.
In 2019, the operating profit margin (11.4%) was down from 2018 (11.9%).
The accommodation services subsector comprises two industry groupings: hotels, motor hotels and motels; and other accommodation industries. In 2019, hotels, motor hotels and motels accounted for 81.6% of operating revenue. In recent years, there has been increasing availability in the hospitality industry of alternative, private short-term accommodations made possible by digital platforms that operate alongside the traditional market. The size of this alternative short-term accommodation market is difficult to assess using traditional survey methods. In many municipalities and provinces, and at the federal level, legislation for this market is evolving. This should provide more information on the private short-term accommodation market in the future.
All hospitality industries have been hit hard by the COVID-19 pandemic and by the related restrictions on non-essential travel to Canada and border closures in 2020. Hotel occupancy and the overall demand for accommodation services remain very low, with economic activity in the accommodation services subsector 38% lower in November 2020 compared with pre-pandemic levels. The pandemic is still not contained and advisories against non-essential travel are still in effect.
Hotels, motor hotels and motels
Total operating revenue for hotels, motor hotels and motels reached $19.3 billion in 2019, up 5.0% from 2018. Growth in this industry grouping was stimulated in part by the record amount of tourism activity Canada experienced in 2019—the number of tourists to the country increased by 4.8%. Ontario accounted for the largest share of revenue (30.3%), followed by British Columbia (22.4%), Alberta (16.1%) and Quebec (15.9%).
The most common type of client was individuals and households, which accounted for 42.7% of sales. This was followed by sales to businesses (28.0%) and sales to clients from outside Canada (20.2%).
The largest share of sales revenue was generated by room or unit accommodation for travellers (70.2%), followed by meals and non-alcoholic beverages (12.2%), and alcoholic beverages (5.0%).
Total operating expenses grew 5.7% to $17.1 billion, with 33.3% going to salaries, wages, commissions and benefits. The operating profit margin declined from 11.9% in 2018 to 11.3% in 2019.
In 2019, e-commerce accounted for 28.0% of total sales. Among businesses that made e-commerce sales, 90.4% of hotels, motor hotels and motels offered the option to reserve through a third-party website. A company’s own website (82.3%) and mobile applications (36.4%) were the next most popular e-commerce methods.
Other accommodation industries
The total operating revenue for other accommodation industries increased 3.1%, reaching $4.3 billion in 2019. Alberta accounted for the largest share of revenue (29.8%), followed by Ontario (25.8%), British Columbia (18.1%) and Quebec (15.3%).
Alberta led all provinces in this industry group because a significant portion of this estimate is made up of rooming and boarding houses that provide accommodation at isolated working locations. This is common among industrial resource extraction operations, for example, those found in northern Alberta. While the same positive tourism-related drivers had an effect on the other accommodation industries, declining capital expenditures in the oil and gas extraction sector in Alberta added downward pressure on demand on the rooming and boarding house industry. Compared with the height of the energy boom in 2014, capital expenditures in the oil and gas extraction sector in Alberta have been cut by more than half and the number of people employed has dropped by 32,100.
Total operating expenses increased 3.5% to $3.8 billion, with 24.1% of these expenses going to salaries, wages, commissions and benefits. The profit margin was 11.6% in 2019, down slightly from 11.9% in 2018.