Montreal’s forward-looking data not reflecting much optimism at the moment

While COVID-19 vaccination programs continue to inoculate travelers around the world, lockdowns in many regions have yet to fully lift, leading to continued challenges for hotel operators. In Montreal, which remains in the “red zone”, or maximum alert level, of Quebec’s COVID-19 alert system, travel between regions and cities is not recommended. Additionally, many types of entertainment and gatherings remain closed or prohibited—although hotels can operate.

Despite the ability to open, 7% of the market’s more than 27,800 rooms remain temporarily closed, and open hotel occupancy for the week ending 1 May reached only 22.1% as restrictions on travel depressed hotel demand.

Current metrics leave much to be desired, and while future hotel performance does not look much better right now, Forward STAR can help hoteliers plan for a brighter future when demand returns in earnest. Currently, the Forward STAR metrics offer a glimpse into traveler sentiment.

Lockdown life

Montreal’s occupancy on the books remains remarkably low over the next 90 days, falling from 20% on 26 April to 6% just two weeks later. This trend, consistent with other markets under strict lockdowns around the world, occurs when markets either de facto or actually limit travel to essential purposes only, as essential travel is often last-minute by nature.

Moving into summer, concerns around travel restrictions continue to deter leisure or business demand from rebuilding. With no announced end date to lockdown, and a 14-day quarantine upon arrival requirement for international arrivals in Canada, would-be guests delay on booking trips to Montreal, contributing to single-digit occupancy on the books.

Pickup, the second Forward STAR metric, representing the change in bookings from the previous week, also exhibits higher growth in the short run, a trend consistent with last-minute bookings. Low but positive pickup from late June through July suggests consumers remain wary and somewhat pessimistic about the length of Montreal’s lockdown and Canada’s travel restrictions.

A small bump in occupancy on the books and a big decline in pickup in mid-June tell another common COVID-19 story: Event cancellations.

Grand Prix impact speeds away

After a cancellation in 2020 due to COVID-19, Montreal planned to host the Canadian Grand Prix on 13 June as part of Formula One’s 2021 season.

However, after months of uncertainty and rumors about who would be allowed to attend, Formula One dropped the Canadian Grand Prix and moved the race to Turkey. Formula One announced the cancellation on 28 April, but the writing appeared on the wall in occupancy on the books for weeks prior.

Occupancy on the books during the event period, or race day and the three days prior, came in lower each week during April. Despite the rapidly approaching race day, Montreal remained locked down and Formula One did not offer ticket sales, leading to the first decline for the 90-day period beginning 12 April. The following week, news outlets began reporting that the race was considering banning spectators, leading to a 3-point decline in occupancy on the books over the event period.

By the 90-day period beginning 26 April, race day occupancy on the books barely reached 11%, a high occupancy compared to the rest of June but a sure sign that consumers felt bearish about the Grand Prix’s viability in Montreal. Consumer skepticism proved accurate, as two days later Formula One cancelled the event.

One week post-cancellation, occupancy on the books tumbled to 9.8%, a high compared to the rest of June but significantly below the almost 20% occupancy on the books recorded one month earlier. As more cancellations trickle in, the level of occupancy on the books will likely continue to fall unless those reservations are replaced by other demand drivers.

Conclusion

More than one year into the COVID-19 pandemic, continued lockdowns and travel restrictions add insult to an injured industry. However even in the locked down and hardest-hit markets like Montreal, forward-looking data can help hoteliers to better understand and face what’s coming in the weeks and months ahead.

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