When the recession hit in fall 2008, Whistler hotels began dropping their rates, hoping to bring in visitors at a cheaper price. According to the Hotel Association of Whistler (HAW), the strategy didn't work as planned and now hotels are dealing with reduced revenue and, despite the deals, reduced occupancy across the resort.
"The short term gain might not have been worth the long term effect. The biggest challenge now will be to get those rates back up to what they once were," said Mark Herron, chair of HAW and general manager of Four Seasons Whistler.
The strategy was supposed to sustain Whistler's economy through the recession. It worked, kind of. The slow economy still exists but Whistler saw a 27 per cent drop in room rates during the first half of 2009 compared to the same period in 2008. It was the country's steepest decline in room rates, according to the Canadian Hotel Profit Index (CHPI). And those numbers have not yet recovered.
HAW is concerned that not only are hotel profits dropping but so are revenues from the hotel tax. The hotel tax is paid to the RMOW and is used to market Whistler. Because tourism is generally recognized as the lifeblood of Whistler, the hotel tax is "essential to our survival," Herron said. If people are paying less for their rooms, tax revenue goes down.
"You find that those restaurants and the retail shops and a number of smaller businesses are affected by this," said Herron. "There's a bigger question as well: if quite a number of the income in the municipality comes from the hotel tax, and both occupancy and rates are dropping, what's happening in that arena?"
According to a 2009 report from PKF Consulting, overall occupancy in Whistler was at 58 per cent, down one per cent from the year before. Average room rates went down from $216 to $193. Revenue for occupied rooms was down $127 to $112 on average.
Between January and May of this year, PKF reports that occupancy rates are down another one per cent from 2009, at 62.7 per cent, although room revenue is up 27 per cent because of the Olympics.
"There is an argument that even a reduction in price didn't really work," Herron said. "We've attracted less people for less money."
"The room rate is driven by demand and when we see demand falling off due to the economic situation - and some hotels have used strategies like lowering prices to drive demand - sometimes that can be successful," said Arlene Schieven, vice-president of marketing at Tourism Whistler.