Are we there yet?

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Before becoming a bedroom community with a neglected and decaying downtown core Aurora was once a hamlet of hotels.  It’s the title of an article that ran the full length of page 8 in The Auroran the week of April 13th, 2004.  The article explores the history of hotels in town dating back to 1863 including the historic McLeod’s tavern, George Lemon’s Royal Hotel and The Queen’s Hotel.  All of which shared the same fate.

The article also profiled the boom-bust-echo effect on the closed Howard Johnsons :

For a few years the hotel was not considered economically viable and a proposal was submitted to convert it into a retirement home.  Howard Johnson sent in Tom Fisher as general manager to close the hotel down for conversion to the retirement home.  Fisher saw the potential of its retention as a hotel, convinced the owners, and the hotel has never looked back.

6 years after this article I had the misfortune of staying at that hotel, and also never looked back.  It was shameful.  A chain hotel in the center of town, accessible by transit, with ample parking, amenities that included a gym and ballroom basically rotted away before the town’s eyes.

Now that it’s gone there are a few that recognize the economic impact this has on the town, while others are purely speculating on money they believe would be injected into the local economy.  More on that later.

While Toronto has been working for months to get permission from the Ontario government to levy a new hotel tax some in Aurora, including Mayor Dawe seem to be headed in the opposite direction.

In a desperate attempt to do anything to attract a hotel to town Dawe framed the entire issue as one that hinged on Development Charges and the need to defer them.

This got repeated in this March 17th Baner piece where York region’s treasurer  points out how revenue from the fees is important to the region’s financial security.  The Region we all recognize is over $2 Billion in debt.

Included in bold on page 4 of report No. 5 of Committee of the Whole which was adopted, without amendment at the region’s meeting held on March 24, 2016 it reads:

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This report includes much-needed context with respect to market demand, industry climate and other key metrics that need to be weighed in.

On April 6th the conversation here in Aurora finally widened beyond DCs and I agree with Clr Thompson’s assessment that there has been an absolute lack of strategy and proactive movement to deal with attracting a hotel, and it’s the first time we hear the term “occupancy rate” enter the narrative:

Everybody has to have a bottom line, so if it is the occupancy rate what can we do to help show off Aurora and the things we are doing with sports tourism and all those other initiatives we are talking about to give them a level of comfort that their occupancy rate is going to be better than what they think it is, which in turn makes it more profitable.

Clr. Mrakas shared the same view and a week later a letter from the Chamber of Commerce weighed in on the need to address steady occupancy rates

While occupancy rates are important, the revenue a hotel could generate from meetings and conferences cannot be overlooked. The Chamber would like to see the demand for these facilities and this potential source of revenue as part of the discussion.

The letter also refuted Mayor Dawe’s claims that sports tourism alone will not drive a hotel, considering there are seasons when sporting events may not ensure high occupancy rates.

A hotel is a factor in Aurora’s Cultural Master Plan which sees Aurora as a tourism destination:

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This was pointed out in May 2014 when the former CEO of the Chamber said a lot of time had been put into attracting a hotel:

I think there needs to be enough data to prove to people that the hotel would be used……. If you look at the number of events that are held in this Town you would definitely think the facility would be used on a regular basis.

That was 2 years ago, but reading the June 1st article profiling the recent meeting between the town and the chamber there still not enough data to prove to people a hotel would be used.

As sad as that is, at least Dawe is finally addressing the element of occupancy:

Hotels are looking for 70 per cent occupancy, so if you have 100 rooms, 365 nights, that’s 25,000 room nights a year

That’s a big number, and one that is unlikely to be filled through tourism regardless if it is coming from sporadic sports events and a measly 60 or so pastel painters.

See the thing is the Ministry of Tourism annually tracks visitor activity and can determine what visitors do while travelling within Ontario. They publish their KPIs quarterly.

Put into a regional context this is explored in the York Region Premier-Ranked Tourist Destination Project report developed in partnership with the York Region Tourism Advisory Group and steering Committee whose members include several hotels, motels and inns.

On page 30 we read that hotel occupancy is below industry standards:

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On page 16 we read their assessment:

While York Region’s core and supporting attractors offer collective appeal they do not present an exclusive or unique product offering; therefore would not be considered superior to other destinations. Many neighbouring destinations such as the Regions of Peel, Durham and Niagara offer similar product experiences and opportunities. These destinations are all located within easy reach of York Region’s target audience and therefore competition for the visitor dollar is significant.

Of the 8 attractions that do stand out to some degree and help form the basis of York Region’s core attractors none listed are inside Aurora.  This is reiterated on page 24:

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At the very bottom of the January 20th piece in The Auroran  Mayor Dawe offers forth some further numbers to crunch:

 “we do have someone who is very interested in doing a hotel, but they can’t make it work at the room rate they would have, which is about $150 per night.”

Let’s see how that stacks up with the competition in York Region:

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Chain hotels show a rate between $100-$250, but then you look at the going rate in Newmarket it’s more around the $100 mark.

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Why would the room rate be so high? Because the projected occupancy rate is low.

Why is the occupancy rate low? Because there is no demand for a hotel.

Aurora had a hotel and it shrivelled up and died.

Understanding market demand for hotel accommodation in York Region is not a mystery, in fact it is clearly broken down my market segments here:

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Tourism only constitutes 10% of entire demand.

As defined above York Region does not have huge tourism attractors.  Even if Aurora is to step-up Sports tourism at the cost of all other tourism efforts it will have a negligible effect on the radar of a hotel operator.

 

Scoring marginally above Tourism is Meetings/Conferences, of which zero are held in Aurora.  The Kingsbridge Center is a nearby conference center that any hotel operator considering a market would be attracted to.

35% of the market is demarcated as Corporate/Commerical.  I ask you, how many Aurora-based businesses can you name that are desperately seeking a hotel to host travel guests?

And finally, the largest market segment at 41% is Government and “Other Discounted Business”.

Does anyone honestly believe the Corporation of the Town of Aurora is capable of generating 41% of the demand for a hotel operator?

The entire discussion around Aurora needing a hotel is needlessly repetitive and annoying as taking a family trip with your kids chanting from the back seat “are we there yet? are we there yet?”

No. We’re not.

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