The largest Holiday Inn in Canada has quietly opened for business on Carlton Street, as the hotel chain bets that upscale amenities at a lower price will woo tourists away from the slate of luxury hotels that have been added to the city’s stable.
The hotel – which was formerly a Days Inn and has undergone $20-million of renovations – has 514 rooms on 23 floors. The lobby features marble floors and hip furniture, the staff wear crisp black uniforms and a custom fragrance is pumped through the halls.
It’s a long way from the basic lobbies of days past, and more in line with the $1-billion re-branding initiative Holiday Inn launched in 2008 to move away from what its management called “a dangerous middle ground” in which investors were still seeing good returns but travellers were beginning to seek hipper lodgings.
“As generations grow up, their preferences change and we need to keep up with the times,” said Gopal Rao, regional vice-president of the Holiday Inn’s parent company IHG Canada. “It’s not so much about fixing something that is broken as keeping things current.”
The hotel did a soft opening earlier this month, and will officially open April 6. It’s the largest Holiday Inn to open in Canada or the United States in 2011.
With more than a thousand luxury hotel rooms being added to the Toronto market this year and next, the chain felt the way to compete was to offer the same amenities – a spa, several restaurants and staff well trained in customer service – as their world-renowned competitors.
“We call that amenity creep in this business,” said Alam Pirani, executive managing director of Colliers International Hotels. “It gets to the point where every hotel has a flat-screen television.”
The Thompson Hotel and the Ritz-Carlton have opened in the past year, and Shangri-La, Four Seasons and Trump all plan to open within the next 12 months. Combined, they add about 1,000 luxury suites to the city’s inventory.
While luxury rooms tend to start at $400 a night, the Holiday Inn charges closer to $175.
“We realized the Holiday Inn had to be more than just a hotel stay, it had to be an experience,” Mr. Gopal said. “The re-launch wasn’t any one item – it started with customer service and ended with a focus on making sure the amenities were what the guests expected, right down to a menu of pillows.”
The slew of hotel openings come as the industry bounces back from one of the biggest slumps it has ever seen. Revenue per available room, a key measure of the sector’s financial health, plunged 12 per cent through the recession. That number is somewhat flattering because many chains kept room rates stable, but offered free nights and other upgrades to attract guests.
PKF Canada, a market research firm, estimated that profitability at the nation’s hotels declined by 33 per cent in 2009. The occupancy rate in downtown Toronto hotels was 68 per cent in 2009, with average rates at about $145 a night.
Occupancy rebounded 8.8 percentage points last year to more than 76 per cent, with rates hitting $157.38, and appear to be moving higher this year as well, according to Bill Stone, executive vice-president of CB Richard Ellis Hotels.
“I think we’re at the point in the recovery in this market place that we can see substantial growth in occupancy and rates,” he said. “With that will come a number of hotels that will look to reposition themselves, and that makes for a more competitive market.”
While not everyone can afford to pay the rates a luxury chain commands, Four Seasons Hotels Inc. chairman Isadore Sharp said any hotel that doesn’t make an effort to modernize will find itself hard pressed to stay in business as travellers find the extra money to stay in nicer accommodations.
“When people come to Toronto, they are going to have a very good choice of accommodations,” said Mr. Sharp, who started the global chain of luxury hotels in 1961 with a Jarvis Street development. “All of the hotels are changing, others will probably go out of business. This is all about upgrades – what was good before doesn’t necessarily work today.”