Hotel prices in downtown Toronto have skyrocketed, and as the busy tourist season draws to a close, industry experts say there are no signs they will drop anytime soon.
They claim that consumers pay significantly more due to a combination of factors.
“Prices are high for two reasons,” said Wayne Smith, a professor in the hotel and tourism management department at Toronto Metropolitan University.
“One of them is inflationary costs. So when prices go up for everything, hotel prices go up,” Smith told CBC Toronto.
“The second thing is wages,” he said.
Rising hotel prices in Toronto are being mirrored in cities across the province and the country. Statistics Canada reported in July that room rates in Canada rose 47.7 percent in July compared to a year earlier, and by 70 percent in Ontario.
Smith said some hotels are still not operating at 100 percent capacity because they cannot hire enough staff.
“For the last two years, these hotels have not been profitable,” he said.
“They were operating at a loss… so there must be some cheating involved.”
The COO of the Annex Hotel, a small boutique hotel in downtown Toronto, said business has been steady since about May. He said his hotel has also increased room rates.
“It’s a competitive market,” said Ryan Killeen.
“If your competitor is selling their rooms for $500 or $600 at peak occupancy and you are fully booked, the Toronto market will follow suit and compete with you,” he added.
“It is a balancing act between what is considered price gouging and what is acceptable to existing consumers.”
Killeen said the Annex Hotel is also making up for lost time and that while it is back to 100 percent capacity, it still needs support from various levels of government.
“The last few years have been extremely tough and that is not something we can easily forget. The help needed from now on will continue to make Toronto a desirable destination,” he said.
“Believe it or not, compared to other major North American cities, prices are still low,” said Tony Elenis, president and CEO of the Ontario Restaurant Hotel and Motel Association.
Elenis said that due to the high cost of building a hotel in downtown Toronto, there is a shortage of rooms in the lower and mid-range price ranges.
“If you look at downtown Toronto, there may not be enough rooms to meet the demands of future growth.”
Although hotel operators say travel is recovering as a result of the easing of health measures during this phase of the pandemic, their revenues are higher than in the past two years. However, they warn that there is still some uncertainty, especially for business travel.
Smith says it is a “bread-and-butter component” for hotels, especially in major cities.
“If that doesn’t turn out positive, they’re going to be in trouble.”
