TOO MUCH, TOO LITTLE, OR JUST RIGHT?
Ottawa’s hotel industry continues to hold its own. But if capacity is not an issue, what is the key driver of new investment?
Dick Brown isn’t afraid to display his irritation when he hears complaints about a lack of hotel capacity in Ottawa during periods of peak demand, such as major festivals.
“That’s no different than not being able to get hockey tickets when the Sens are playing a favourite team,” said the executive director of the Ottawa-Gatineau Hotel Association.
In fact, Ottawa’s hotel occupancy rate hit 70 per cent last year, a few percentage points higher than the 10-year average. While that’s a solid number, it still reveals there is unused capacity to absorb.
Building hotels isn’t cheap. It costs $250,000 to $350,000 per room to construct a full-service downtown hotel. The decision to build is marketdriven and many players continue to find reason to make the investment in Ottawa. In fact, local capacity has increased in the past year by about 12 per cent, thanks to the addition of smaller venues in the suburban markets and the Courtyard Ottawa East by Marriott. That rate of growth appears to be sustainable. “In most markets you would expect to see some amount of slippage as that new inventory gets absorbed,” said Brown. “But to date we have been holding our own.”
And new capacity keeps coming. Groupe Germain has plans for a location on Slater. A hybrid condo/hotel is in the works for Sparks Street. Two more for the west end are in the planning stages. Even homebuilder Claridge is getting in on the action.
“I think it reflects the health of Ottawa’s tourism and hospitality economy,” Brown said. “The tourism sector has performed well in recent years ... the industry has coalesced ... it works collaboratively better than in most other centres.”
COLLABORATION VS. HEALTHY COMPETITION
Of course, that spirit of collaboration doesn’t mean area hotels are not in fierce competition with each other. No hotel can afford to stand still if it wants to remain relevant to the evolving tastes of the leisure and business traveller, said Daniel Laliberte, GM of the 40-year-old Ottawa Marriott on Kent Street.
“Every hotel, every brand, has a requirement, as far as scheme, colour, that sort of thing, as to what will go in the room,” he said. “Everybody looks at what everybody else is doing. We do focus groups with clients, to see what is important in the room, what do they do when they get in the room, what kind of things do they want?”
More and more, guests want the same cozy feel of a residential home, he said. It began a decade ago with better beds and fluffy white duvets that easily demonstrated the bedding was clean and fresh. Then it moved on to the bathrooms. In newer builds these have grown larger, equipped with bigger shower stalls and gleaming tile. Most hotels of three stars and above are now offering spa-quality, brand-name soaps and creams, instead of the old generic versions bearing the hotel’s logo, and in larger quantities.
For an older hotel such as the Marriott, it isn’t always feasible to push back a wall and enlarge a bathroom, but changing tastes are impacting in other ways. Laliberte just spent $250,000 to increase the size of the bandwidth pipe bringing high-speed Internet into the building to ensure a minimum of 5 MBs per room. Wireless has become table stakes, so much so that a wired connection in a guest room has almost become an anachronism.
Providing that full connectivity, even the means for guests to output their own video to their rooms’ TVs, is an expected amenity hotels can’t ignore even though it is eroding traditional revenue streams, such as pay-per-view television services. While some hotels still charge for a wi-fi connection, this too will soon fade away like charging for local phone calls did, Laliberte said.
CATERING TO THE DIGITAL NOMADS
What, or more precisely, who, is driving all of this?
“It’s a mix of work and play that really addresses the new generation,” Laliberte said.
While boomers still constitute the bulk of hotels’
clientele, within five years, the younger generations will account for half, he said. In 10 years, they will represent the regular traveller.
This desire to mix work and play and be mobile also extends to the common areas of a hotel. Gone are the days of the stuffy dining room. Today’s look is a much more open, multi-purpose space that includes areas for casual and more formal dining, as well as a bar and even a cafe. Guests can easily move back and forth between work and leisure activities.
Between new builds and the never-ending need for established venues to stay current and relevant to a new generation of traveller, Ottawa’s hotel business appears to be on a steady track.
There are of course challenges. For Laliberte, these are twofold. The first is employment cutbacks by the federal government, which remains a key “demand generator.” The second is the new Convention Centre, which, despite its improvements over the old Congress Centre, is still limited by its size in terms of the groups it can attract when compared to larger meeting venues in Montreal or Toronto.
Still, Brown is confident in the appeal of what the Ottawa market has to offer.
“We have a good accommodation product,” he said. “If we can continue the growth, someone may very well decide to make the investment in a large full-service hotel in the core, but as I always say, that will be driven by business numbers.”