Tourism sector requests more federal assistance
Thousands of businesses across Canada worry summer season won’t be saved
Shelley Windsor and her husband, Bill, were in the middle of renovating their 14-room boutique hotel in Stratford, Ont. when the government issued pandemic lockdown orders.
The rooms at the Mercer were torn apart, awaiting new paint, window treatments, locks, mattresses and bedframes in anticipation of a busy summer season in the festival-fuelled tourism town that was preparing to open a new theatre. Overnight, they turned from menu planning and hiring at their three restaurants to laying off 50 people at their family business, now down to skeleton operations run by the couple and their two sons aged 18 and 20.
“For us it was catastrophic,” Windsor said. “Here in Stratford, you have a long cold winter … while we had a little money in the bank, there’s nothing that could’ve prepared us for a complete closure and shutdown.”
Windsor is one of thousands of hotel, restaurant and tourism operators across the country distressed by the pandemic and uncertain whether travel will resume in time to salvage the summer season where many earn most of their money. The tourism industry is calling for additional government measures for fear that the emergency government programs introduced so far, while helpful, won’t be enough to keep them afloat if the pandemic results in months of zero to little revenue.
Since the shutdown, hotels have laid off more than 250,000 workers and reported a 90 per cent drop in revenue as occupancy plummeted to less than five per cent, according to Hotel Association of Canada president Susie Grynol.
“It’s been devastating,” she said in an interview. “This crisis could not have come at a worse time from a cash-flow perspective.”
Most Canadian hotels have closed unless they’re providing rooms for humanitarian purposes such as quarantine or accommodation for health-care workers, said Grynol, whose organization represents 8,200 hotels, 87 per cent owned independently.
The federal wage subsidy program provides some relief for the sector, but expires in three months. Considering many hotels won’t reopen by at least June, the industry is calling on the government to extend the subsidy until revenue losses are below 30 per cent.
Liquidity is the main program across the tourism sector as operators try to cover fixed costs including mortgages and property taxes that didn’t disappear along with the guests.
The industry is asking the government to make loans available on a per property basis instead of per owner, to fully guarantee the loans of up to $6.25 million for businesses that were solvent before the crisis and to ensure businesses in vulnerable industries have priority access to government funds.
Tourism is a $102-billion industry that employs about 1.8 million Canadians, according to government statistics.
About 1 million jobs have already been lost at this point according to preliminary industry estimates, said Charlotte Bell, president of the Tourism Industry Association of Canada. If the lockdown extends beyond June, that could escalate to 1.6 or 1.7 million job losses, she said.
“Tourism was the proverbial canary in the coal mine,” Bell said in an interview, noting that operators were first to notice the drop Chinese travellers as early as December and January.
While the association supports the shutdown measures, the travel standstill has erased revenue for businesses that needed cash after weathering the slower winter period. Small businesses are reluctant to take on more debt if they might not earn any income this year.
“An alarming number of small businesses in this sector facing imminent closure unless they can access liquidity in the coming days or weeks,” Bell said. “Some will not be able to survive.”
While Bell suspects Canadians will be eager to travel once isolation measures are lifted, tourism’s recovery will depend on how comfortable travellers are and how quickly international travel resumes. She praised the government for quickly stepping in with support and for its willingness to tweak programs when it discovers gaps, but said it will be critical to ensure a mix of operators survive the pandemic so travellers can access experiences when they arrive.
“There are sectors like tourism that have been harder hit than others and will need more assistance during recovery,” she said. “We cant’ afford to let the sector just fall apart.”
In an interview, Economic Development Minister Mélanie Joly said the government is focused on helping tourism businesses survive by mending the gaps in programs like the wage subsidy and rent relief. It has also doubled the budget of Regional Development Agencies, which also cover tourism-related businesses.
“The idea is really to make sure that for the tourism operators that don’t necessarily qualify yet for programs have another door to knock on,” Joly said.
Financial Post
An alarming number of small business in this sector facing imminent closure unless they can access liquidity in the coming days or weeks.