According to the most recent Traveller Accommodation Survey by Statistics Canada, hoteliers across the country were generally quite pessimistic regarding their industry's health over the near term.

This outlook is consistent with the most recent international travel statistics. They reported a decline in travel both to and from Canada in November (the most recent month available).

Year to date in November 2008, the total number of visitors to Canada was down 10.4%. This drop is primarily due to a 12.7% fall in the number of U.S. visitors, who account for 80% of total non-resident visitors.

It is worth noting that this significant slowdown in U.S. travel to Canada has occurred despite the fact that, since June 2008, the price of gasoline in the United States has dropped by over 50 per cent and the purchasing power of the U.S. dollar versus the Canadian currency has increased by approximately 20%.

The generally very weak outlook for the U.S. economy will probably continue to depress the volume of U.S. business and recreational travellers to Canada well into the second half of 2009.

With respect to the outlook for domestic travel, business travel will probably be depressed over the next six to nine months by weak growth of gross revenues and a need to reduce discretionary spending.

At the same time, domestic recreational travel is also likely to suffer in the near term due to two factors: (1) the precipitous 200,000-job drop in full-time employment over the past three months; and (2) the accompanying deterioration in consumer confidence.

Looking ahead, in the near term, the sustained relatively strong growth in the value of building permits for hotel and restaurant projects in the second half of 2008 should support hotel and restaurant construction into the second half of 2009.

However, the deteriorating pattern of hotel occupancy late in 2008, as reported by PKF Consulting, will probably continue, causing a further decline in revenue per available room.

Consequently, CanaData expects that hotel construction will contract in the second half of 2009 and through 2010.