Data shows how city’s economy has bounced back while some sectors are struggling to survive
To look at Toronto’s latest job figures, you’d think the city’s economy had largely bounced back.
The numbers, which plummeted in the wake of the COVID-19 pandemic, have come back, from an average of 3.04 million jobs in May to an average of 3.4 million jobs for the three months ending in October, according to Statistics Canada data for the census metropolitan area.
And jobs in the information, culture and recreation sector during the same time period are higher even than they were last year — 178,000 compared to 153,500 in 2019. A deeper look at the numbers that fuel the local economy, though, shows some industries have been devastated, namely the sectors that rely on people congregating.
Toronto’s tourism industry has lost hundreds of millions of dollars, which translates into more than a billion dollars in lost tax revenue to all three levels of government, according to estimates. Retailers are subleasing space for a fraction of the price, occupancy rates at hotels and motels have plummeted, and the city’s food and accommodation sector has lost nearly 40,000 jobs since January.
“They’ve been hit the hardest, for sure,” says Mikal Skuterud, an economics professor at the University of Waterloo.
Premier Doug Ford has spoken extensively during press conferences about concerns he hears from small business owners worried about surviving pandemic restrictions, and he has expressed sympathy with their struggles. Critics have ventured as far as to say economic concerns help explain the province’s reluctance to send Toronto into a full lockdown as the second wave grew.
Some experts think it will take a vaccine and a couple of years before people feel safe enough to be in crowded stores and restaurants again.
Others think the horizon is just ahead.
“We feel our recovery is inevitable and I say that very boldly,” says Scott Beck, president and CEO of Destination Toronto, a marketing organization that promotes the city to global travellers as a place for major meetings and events. “There is no alternative to travel. There is no a
Horseshoe Tavern. You can’t digitize those experiences.”
Some associations, meanwhile, say they need targeted help from the government to survive and are asking for transparency about why they were forced to shut down. On Friday, new lockdown measures for Toronto and Peel included restricting restaurants to takeout and delivery.
“Since the start of the pandemic, our members have been investing millions to protect the health and safety of their staff and patrons,” says Restaurants Canada president and CEO Todd Barclay. “When jurisdictions experience rising cases, restaurant operators deserve to know why, and what they can
g an important role in the economic recovery of their communities.”
Here, we take a look at some key indicators and talk to experts about what the numbers mean.
Vacancy signs flash in the city
If there was any doubt that city dwellers were stepping out to Prince Edward County and Muskoka this summer, the evidence is in.
Statistics from the Ontario Restaurant, Hotel & Motel Association show that occupancy rates were only marginally affected in cottage country and Prince Edward compared to other parts of the province such as Niagara Falls and Toronto, where they bottomed out.
The city “has been hurt the most,” says Tony Elenis, president and CEO of ORHMA. “There are no drivers of events, no sports, no concerts, no conventions, no conference. Attractions are closed. The bigger the city, the worse it is in the pandemic when usually it’s the other way around.
“The bigger the venue, the more it will be hurt in the long term.”
Hotels were designated as essential in March and many stayed open, renting blocks of rooms at discounted rates to hospitals so that health-care workers could isolate or stay close to work, and patients could wait for surgeries, says Elenis. Temporary foreign workers were also put up in hotels. as were travellers who needed to isolate.
But he says hotels and restaurants are feeling the pinch now more than ever, as debt builds up, with utilities and taxes to
“It’s not like March, when we had hope that maybe this will last three or six months,” Elenis says.
“If it wasn’t for the wage subsidy from the federal government, you probably wouldn’t have seen as many hotels or patios open at restaurants during the summer.”
He says the industry is desperate now and needs relief.
“This pandemic has been a crisis right from March,” Elenis says. “The industry has been devastated. All our strengths in engaging people, providing a forum for people to meet, to entertain, to have experiences, really are working against us.
“We’re supposed to be a fun industry where you celebrate, go and have dinner and meet people or bring your family,” he says. “And all that are impediments for us.”
Elenis applauds the provincial government for lowering the business education tax, a component of property taxes, and lowering hydro costs, which he says have put a lot of pressure on restaurants and hotels over the years. Utilities are the third biggest cost after labour and food.
“We’re asking the federal government for sector-specific relief,” Elenis says. “Many businesses are progressively opening, but the hospitality industry is not. Any support needs to be targeted to the hotels. That way they’ll be able to support, with a little more cash infusion, those that are hurting the most.
“It’s tough times,” he says, “but we just need to hold our heads up and move through this.”
Visitor spending out of pocket
According to Destination Toronto data, in April 2019, monthly visitor spending in Toronto was around $526 million. This year, that amount dropped to $33 million. Summer spending peaked in August 2019 at $706 million. This past August, that amount was just $104 million.
The combined projected loss in tax revenue at the federal, provincial and municipal levels due to lost visitor spending is about $1.3 billion in 2020.
“The visitor economy that is so vital to Toronto is so much more than just leisure travel,” says Beck, of Destination Toronto.
There are also corporate travellers and those who come specifically for events — trade shows, conventions, and meetings of international societies and professional associations. In fact, events are the largest contributor of the visitor economy, he said.
Since the pandemic hit, all three of these areas — leisure, business and event-related travel — have stopped. “You have no events at hotels, you have no events at Scotiabank (Arena), you have no cultural events,” Beck says. “When we say we’re down 81 per cent, and that number is a $7.2-billion loss, that’s why it’s so big.”
For every $100 spent by a visitor to the city, $28 goes to food and beverage, $24 goes to acac to
goes retail, followed by local transportation and attractions, according to Destination Toronto.
“That’s how a community like Toronto can sustain the diversity and the scope and scale of the culinary scene we have,” Beck says.
“Those ecosystems that are built around a way a traveller spends money in the community are where the devastation comes.”
Restaurants in the red
The Ontario Restaurant Hotel & Motel Association estimates that 15 per cent of its member restaurant and food service venues have closed and that on
lost in the hotel and restaurant industry this year over last, according to Conference Board of Canada figures.
The figures are just as grim from Restaurants Canada, a national, not-for-profit association that represents independent restaurants, national chains, hotels and suppliers, among others.
A survey conducted by the association in September found that 44 per cent of respondents said they were operating at a loss and 25 per cent were just breaking even.
“Whenever indoor dining is shut down, this can result in sales losses of as much as 80 per cent for full-service restaurants and at least 40 per cent for quick-service restaurants,” a Restaurants Canada spokesperson wrote in an email. “This adds to already growing debt burdens that restaurants are struggling to manage amid the ongoing economic and public health crisis.”
The organization estimates that up to half of independent restaurants may not survive.
It is lobbying government for help, asking for measures such as stimulus spending, protection for commercial tenants from evictions, emergency assistance for restaurants forced to close indoor dining, and stronger enforcement and penalties for flagrant violations of COVID-19 restrictions.
A recent letter to Ford from Restaurants Canada called for a “dedicated task force to develop solutions that will ensure our industry’s survival — data transparency and timely consultation is one of the key things we’re urging this task force to provide our industry,” says a spokesperson.
A typical restaurant has invested around $20,000 in protective equipment since the pandemic, according to the organization.
It wants more data transparency “to understand what’s driving government decisions so that restaurants can be empowered to avoid suffering the devastating consequences of further restrictions.”
Data from Open Table, one of the largest online reservation services in the world, shows that reservations in the city never made it back to pre-COVID levels and at their best, on Aug. 22, they were still down 35 per cent over the year before.
Demand for retail space decreases has been a go-to marToronto ket for international retailers, with high-demand areas such as the Bloor Street strip and malls such as the Eaton Centre and Yorkdale.
But online shopping began to make a dent in the retail lease market in 2019 and the trend has “reached new heights this year,” says Aman Chowdhary, a senior market analyst with CoStar, a commercial real estate data and information provider.
The company is forecasting retail vacancy rates in malls and storefronts in the city will continue climbing at the end of this year and into the next.
New retail lease activity in Toronto has also taken a nose dive.
Typically, the city sees anywhere from 350,000 to 400,000 square feet on average of new leases every quarter, but in the three months that began in April, leasing activity more than halved, and it has not made a significant comeback. And subleases, a common practice where retail leaseholders find tenants when they have too much space or because business is failing, are being given away. The average price has dropped from nearly $40 a square foot at the end of 2019 to $15 midway through 2020.
“On top of the obvious pain that’s coming with people just not entering your store, not having the comfort levels to browse even, on top of that your prospects for subleasing your space are extremely low,” says Chowdhary. “And if you are lucky enough to find anyone or line anyone up, they’re going to be paying significantly discounted sublet rents.”
Chowdhary sees no signs of the retail market picking up in the near future.
“The gravitational pull towards e-commerce and online shopping trend, I think that’s going to continue,” Chowdhary says. “Until we can safely say the ered vaccine widely, has I don’t been think administt people will really get out there and get back to the same level of shopping on a retail level.”