Alberta Hotels and Motels Weathered the Storm
Throughout the recession, tourism continued to be an enormous support to Alberta’s economy. New data from Statistics Canada shows the accommodation sector managed to navigate the downturn reasonably well.
In 2015, Alberta’s hotels, motels and other forms of short-term accommodation did better than the Canadian average. The profit margin that year was 11.2 per cent (i.e., operating revenue minus operating expenses, expressed as a percentage of operating revenue). That compares to the national average of 10.8 per cent.
The graph below shows the rankings of provincial profit margins for 2015. British Columbia took top honours with a profit margin of 14.9 per cent. Prince Edward Island, Newfoundland and Labrador, and Alberta were all close together at just above 11 per cent. These four provinces share a common element: a strong and vibrant tourism sector. The fact that 2015 was a record-setting year for tourism was, no doubt, a contributing factor to the accommodation sector’s financial success in these provinces.
Not all of Alberta’s hotels and motels would have fared so well. In many smaller communities and rural areas, it is the energy sector – not tourism – that fills hotel rooms. With the oil price downturn in 2015, many operators may have struggled.
Looking forward, things could improve. This year is expected to be another record-setting one for tourism in Canada. With stronger oil prices, energy companies are gradually ramping up some of their drilling programs, so we may be seeing more “NO VACANCY” signs around Alberta this summer.