Toronto's hotel prices are soaring. And don't expect them to drop anytime soon, experts say
Hotel prices across downtown Toronto have skyrocketed and as the busy tourist season winds down, industry experts say there's no sign they'll come back down anytime soon.
They say consumers are paying substantially more due to a combination of factors.
"Prices are high for two reasons," said Wayne Smith, a professor in the hospitality and tourism management department at Toronto Metropolitan University.
"One is inflationary costs, so as the cost of everything goes up, the cost of hotels go up," Smith told CBC Toronto.
"The second thing is wages," he said.
Rising prices at Toronto hotels are mirrored in cities across the province and the country. Statistics Canada reported in July that traveller accommodation prices in Canada rose by 47.7 per cent in July compared to a year earlier, with prices in Ontario increasing by 70 per cent.
Smith said some hotels are still not operating at 100 per cent capacity because they aren't able to hire enough staff.
"The last two years, these hotels have not been profitable;" he said.
"They have been operating at losses ... so there is also a little bit of make-up going on as well."
The chief operating officer of the Annex Hotel, a small boutique hotel in downtown Toronto, said business has been steady since about May. He said his hotel has raised room rates, too.
"It's a competitive market," Ryan Killeen said.
"if your competitor is selling their rooms at $500, $600 and at high occupancy and you are sold out, the Toronto market is going to follow suit and compete," he added.
"It's a balancing act of what is viewed as price gouging and what is viewed as acceptable to your pre-existing consumers."
Killeen said the Annex Hotel is also making up for lost time, and although it's back to 100 per cent capacity, he said support from various levels of government is still required.
"It's been a couple of years of extremely hard times, that doesn't just get erased. The assistance needed from here on out is continuing to establish Toronto as a go-to destination," he said.
"The rates when you compare them to other large North American cities are still low, believe it or not," said Tony Elenis, president and CEO of the Ontario Restaurant Hotel and Motel Association.
Elenis said because the cost of building a hotel in downtown Toronto is so high, there's a shortage of rooms in the lower and mid-market accommodations.
"If you looked at the downtown area in Toronto, there are not enough rooms to perhaps meet the demands of future growth."
Although hotel operators say with travel bouncing back amid loosening public health measures at this stage of the pandemic, their revenues have been higher than in the past two years. But they warn there is still some uncertainty, especially when it comes to business travel.
Smith says it's a "bread-and-butter component" for hotels, particularly in the big cities.
"If that doesn't come back strong, they are going to be in trouble."
