The Hotel Industry in Downtown Edmonton THE GREAT POTENTIAL OF A GROWING DOWNTOWN

Transcription

1 The Hotel Industry in Downtown Edmonton THE GREAT POTENTIAL OF A GROWING DOWNTOWN 1

2 AUTHOR Khedija Hentati, PharmD MBA Candidate (2016) University of Alberta, School of Business E: P: DESIGNER Karrone Stephenson, Dip. Des + DM E: karronestephenson@gmail.com

3 TABLE OF CONTENTS Introduction: the history of the hotel industry in Downtown Edmonton...4 The Hotel industry in Edmonton...5 The Hotel industry in Downtown Edmonton...6 Overview Economic impact The performance of Downtown Hotels in the regional market...8 The best in the province A Downtown that surpasses its competitors The great potential of Downtown and the expected increase in demand for hotels...12 The development of the hotels capacity and quality Improvement of the access to the city and to the Downtown The alignment of consumers' expectations and attractions offered in Downtown Marketing and promotion Refute misleading perceptions and reposition the Downtown...22 Conclusion Recommendations for excellence...24 Tomorrow belongs to people who prepare for it today. 3

4 THE HISTORY OF THE HOTEL INDUSTRY IN DOWNTOWN EDMONTON 2015 is a special year for the Tourism in Edmonton. Not only the hotel industry in Downtown is celebrating its 111th birthday, but also our city is, according to National Geographic, among the 11 best destinations in the world for this summer. The first Downtown hotel, ''The King Edward Hotel'', opened its doors in 1904, offering a place to stay for traders. At that time, Edmonton was a young city (1 year old), but the capital of fur trading. Tourism development is closely related to the demographic and economic growth. In 1914, the population grew by 30 times when Edmonton amalgamated with Strathcona. Consequently, a second hotel was built in In 1940, after the discovery of Oil in Leduc, the second economic boom occurred in the region resulting in the expansion of the 2 existing hotels at that time. However, since 1978, exactly when the LRT started operating, the architecture of the city has changed and suburbs emerged. Hence, Downtown population growth slowed down reaching even a negative 4.9% in Downtown Tourism was affected and no hotel has been built since

5 THE HOTEL INDUSTRY IN EDMONTON Today, Edmonton is Canada s fastest growing city, and Downtown population is growing again at a fast rate estimated at 20.4% between 2011 and Also, in 2014, the city issued roughly $2.6 billion worth of building permits for the Downtown core, where 58% of the $10 million-and-more projects are planned. In addition, the closure of the ''Blatchford Field'' airport eliminated all height restrictions for the Downtown core, which is expected to positively affect the density and the vibrancy of our city center. (City of Edmonton) POPULATION GROWTH: EDMONTON VS DOWNTOWN In 2012, Edmonton received 6.49 million visitors among which only 2.89 million (44%) stayed overnight. The visitors were essentially from Alberta (84%) and Canada (12%), which explains the low rate of overnight stays. In total, 2.35 million nights were booked including 15% for business and 26% for leisure (Travel Alberta, 2012). With an average daily spending of $112.5/visitor (DBA survey, 2015), an Average Daily Rate (ADR) of $81 and an average length of stay of 2.9 nights (Alberta Tourism, 2012), Edmonton generated an approximate direct expenditure in tourism of $1.5 billion in % 40% 30% 20% YEG YEG DT 10% 0% -10% Capital city s Downtown is not only home for the Oil and Gas industry but is also the location of choice to LIVE, WORK, SHOP, PLAY, LEARN and STAY! 5

6 THE HOTEL INDUSTRY IN DOWNTOWN EDMONTON OVERVIEW Downtown Edmonton is the most popular location in town as roughly 75% of potential visitors expressed their preference to stay in Downtown (DBA survey, 2015). This tendency is certainly related to the cultural, urban and culinary experience offered by the Downtown core as well as to the convenience of transport from and to Downtown. Downtown total capacity is estimated at 2,472 guest-rooms and 14 hotels (1 residence, 5 limited service, and 8 full service places) among the 84 in town. THE ECONOMIC IMPACT The hotel industry contributes to the economic growth by creating jobs, impacting the transportation and food industries, increasing visits to cultural attractions and raising the revenue of commercial retails. Based on the regional revenue per tourism expenditure category, the direct expenditure generated by hotels in the Downtown core can be divided as following: $ 59 million spent in transportation, $92.5 million in auto rental, $168 million in accommodation, food and beverage, $29.5 million in entertainment and $70 million in retail (DBA, 2015). Hotels in Downtown represent only 16 % of the total capacity of the city; nevertheless, it captures roughly 28% of the total demand in the region. In 2014, Downtown Edmonton received an estimated 1.8 million visitors. Hotels secured 660,000 room-nights among which 99,000 are for business and 171,000 are for leisure. Consequently, they added $420 million in direct tourism expenditure including $96 million as revenue for hotels (DBA, 2015). 6

7 ESTIMATED DOWNTOWN TOURISM S DIRECT EXPENDITURE GENERATED BY THE HOTELS Accommodation, food and beverage Transportation Auto rental Entertainment Retail and other Total estimated Tourism s direct expenditure $168 million $ 59 million $92.5 million $29.5 million $70 million $420 million Consequently, hotels in Downtown added roughly $208 million in tax (3 levels of government), 6873 jobs in the hospitality industry, $504,000 in value-added and $1.15 billion in gross output. ECONOMIC IMPACT OF DOWNTOWN HOTELS Value-added $504,000 Gross Output Taxes Employment $1.15 billion $208 million 6,837 jobs 7

8 THE PERFORMANCE OF DOWNTOWN HOTELS IN THE REGIONAL MARKET THE BEST PERFORMANCE IN THE PROVINCE Assessing Downtown Hotels in their environment is a key to achieve a competitive advantage. We are proud to be the best performer when compared to whole city and to the province. For the last two years, Downtown Edmonton outperformed both the city and the province with the highest Occupancy Rate. For 2013, Downtown's occupancy was estimated at 73.2% while that of the city was close to 69.8% and that of the province was evaluated at 68.1%. Similarly, in 2014 the Occupancy Rates were 73.4%, 69.2 % and 67.8% for respectively Downtown, Edmonton and Alberta (PKF, National Market Report, December 2014). OCCUPANCY RATES: DOWNTOWN, EDMONTON CITY & ALBERTA Alberta Edmonton 0.72 Downtown Edmonton VARIANCE IN OCCUPANCY RATES: For the Downtown core, not only the Occupancy Rate was the highest, but also the growth in occupancy between 2013 and 2014 reached 0.3% while both Edmonton and Alberta saw a retraction by respectively -0.9% and -0.4% % 0.3% Alberta Edmonton Downtown Edmonton %

9 On the other hand, Downtown was leading for two consecutive years (2013 and 2014) in the RevPAR surpassing Edmonton and Alberta. For 2013, RevPAR were $100.14, $88.84 and $94.11 for respectively Downtown, Edmonton and Alberta. Similarly in 2014, the RevPAR of the Downtown estimated at $ was higher than that of Edmonton ($92.63) and Alberta ($96.92). Although the RevPAR growth ( ) was important for both Edmonton (4.3%) and Alberta (3%), the increase of Downtown RevPAR (7.2%) was once again the most prominent. In conclusion, Downtown surpassed the city and the region in the occupancy, the Revenue Per Available room, and the growth of these two indicators. REVPAR: DOWNTOWN, EDMONTON & ALBERTA VARIANCE IN REVPAR: Alberta Edmonton Downtown Edmonton 7.2% % 4.3% 0 Alberta Edmonton Downtown Edmonton 9

10 A DOWNTOWN THAT SURPASSES ITS COMPETITORS During the last 2 years, Downtown Edmonton outperformed not only the regional market but also its direct Albertan competitor: Downtown Calgary. Edmonton and Calgary are the two economic capitals of the province and the tourism industry is similar in both cities. Even though Downtown Calgary has a higher capacity (26 hotel), a higher number of visitors, a longer average stay, higher Average Daily Rates and captures 39% of the demand (vs 28% for Downtown Edmonton), it doesn't perform as well as Downtown Edmonton, which shows a major growth potential. Concerning the Occupancy Rate, Downtown Edmonton showed a better performance during the last 2 years. For 2013, the rate for Downtown Edmonton was estimated at 73.2% while Downtown Calgary rate was close to 72.6%. Similarly for 2014, the occupancy rate saw a 1.9% decline in Downtown Calgary but a 0.3% increase in Downtown Edmonton (PKF, National Market Report, December 2014). For the RevPAR, in both 2013 and 2014, Downtown Calgary had a higher Revenue Per Available Room that can be explained by the higher Average Daily Rate. Nevertheless, Downtown Edmonton RevPAR had a faster growth reflecting the development's potential of our Downtown. 10

11 OCCUPANCY RATES REVPAR GROWTH BETWEEN 2013 AND Downtown Calgary 0.71 Downtown Edmonton OCCUPANCY RATES GROWTH BETWEEN 2013 AND Downtown Calgary Downtown Edmonton Downtown Calgary Downtown Edmonton Downtown Calgary Downtown Edmonton

12 THE GREAT POTENTIAL OF DOWNTOWN AND THE EXPECTED INCREASE IN DEMAND FOR HOTELS Downtown is undergoing major changes including a demographic and economic boom. Meanwhile, a strategy to develop the Hotel industry in the region and specifically in the Downtown has been shaped. The plan relies on 4 principles: developing the capacity and quality of the hotels, facilitating the access to the city and to the Downtown, aligning the consumers' expectations and the services/attractions provided, and promoting the Tourism in the region and overseas. Downtown is undergoing changes supporting this strategy; hence, the demand is expected to grow for the next few years. THE DEVELOPMENT OF THE HOTEL QUALITY AND CAPACITY Two new hotels under construction: One is expected for 2016, the other for 2018, the two new branded hotels are in their construction phase and will bring more diversity, quality and capacity. The total cost of the project is estimated at $200 million. The first Hyatt Place in Canada: The new Hyatt Place Hotel, the ''Glass Castle'', is opening soon (early 2016) and will add a substantial value to our Downtown. It will be the first Hyatt Place in Canada and it is certainly not a chance that it is located in Downtown Edmonton, on 96th street and Jasper avenue. Investors believe in the huge potential of the city and support the growth of the region. The cost of the project is estimated at $55 million. Today, the last panels are in place, the interior in almost finished and some business groups have already secured their reservations for The new Hyatt Place, a 14-storey and 255-room hotel, will offer an upscaled limited service. Visitors should expect large modern rooms, sunny bright spaces provided by the glass façade, and an amazing view of the River Valley. The top floor of the Glass Castle will be a 4400 sq. ft. ballroom for meetings and special events. Two other ballrooms of 2400 and 1200 sq. ft. as well as 3 boardrooms will constitute, along with the top floor ballroom, a total of 8000 sq. ft. of meeting space. 12

13 The architectural masterpiece will attract tourists and provide them with the sensation of an art gallery, 255 luxury rooms including 150 king-bedded rooms, 71 double queen-bedded rooms and 34 king suites, competitive rates, one restaurant, and one cocktail and coffee bar with a view on the Valley. The 14-storey hotel offers 3 underground levels of commercial parking space. The new hotel in the ''ICE District'': a luxury hotel in a skyscraper: Located in the heart of the Arena District, on 104th avenue and 102nd street, the new Delta hotel will be managed by Marriott International after the approbation by The Canadian Competition Bureau, in March 2015, of the transaction between Marriott International and BC Investment Management Corporation. Marriott does not anticipate changing any Delta hotel into a Marriott location, but it will extend the Marriott reward platform to Delta properties, allow Delta customers to book their rooms on Marriott's websites and enlarge the diversity of its services. Meanwhile, the Delta brand will avail from the international recognition and reputation of Marriott to attract international visitors. For instance, local and regional customers represent 94% of Delta customers against only 56% of Marriott guests. The Delta Hotel will be a 26-storey hotel in a skyscraper of 50 storeys. Constructions on the main floor are expected to start in fall 2015 and the hotel is anticipated for The cost of the total building is estimated at $350 million. The new 4-star Delta will have 362 guest rooms and suites, and will offer 13

14 numerous upscaled amenities, such as a luxury roof-top-pool, an outdoor terrace, and a large fitness facility. It will house approximately 24,000 sq. ft. of art ballroom, meeting, and conference space, with access to an outdoor area overlooking the EAD s public plaza. Above the hotel, additional 200 private condominiums are planned. The direct impact of the two new branded hotels: Additional guest rooms 617 Capacity increase (guest room) Almost 25% THE DIRECT IMPACT OF THE HYATT PLACE AND THE NEW DELTA Together, the two new hotels will add 617 rooms to the Downtown core; therefore, they will increase the supply by 24.9% and attract bigger groups of visitors. The increased capacity would create a constructive competitiveness that would lead to an improvement in the quality of service and a diversification in the supply. On the long term, this would help to reposition the Downtown Hotels in the market. Additional meeting space Probable outside Downtown market share to be captured Additional night-rooms to be booked per year (based on 2014 occupancy rate) Additional revenue for the hotel industry/year (based on the 2014 ADR) Additional direct expenditure in Tourism in Downtown/year Estimated jobs to be created in the hospitality industry in Downtown Additional tax revenue per year 32,000 SF 43% 165,000 $24 million $105 million* 1,718 $52 million Additional value-added $126 million Additional gross output $287 million *The additional direct expenditure in Tourism can be categorized as following: $14.7 million added expenditure in transportation, $42 million in the accommodation, food and beverage, $7.35 million in the entertainment, $23.1 million in auto rental and $17.85 million in retail and other. 14

15 THE PROBABLE IMPACT OF THE NEW HOTELS The two projects are expected to increase the number of visitors to Downtown as 43% of outside Downtown potential visitors will be attracted to the city center (DBA survey, 2015). This can result in an additional 730,000 night-rooms booked /year, $464 million in direct expenditure/year, 7600 job created and $230 million in tax revenue/year. Additional night-rooms to be booked/year 730,000 Additional direct expenditure generated/year Additional revenue for Downtown hotels/year Additional revenue in accommodation, food and beverage/year Additional revenue for the entertainment industry/ year Additional revenue in transportation/year $464 million $106 million $185.6 million $32.5 million $65 million Probable jobs to be created 7,600 THE INDIRECT IMPACT: RENOVATING AND UPGRADING THE EXISTING HOTELS The two new hotels raise the bar for the existing products on the market. To face the upcoming competitors, eight out of the thirteen (8/13) hotels in the Downtown core have undertaken renovations. Major transformations include renovating guest rooms, suites, lobbies and facades. A new product also emerged: 65 guest rooms in concierge floors with a private lounge in each floor. It is a luxury product new to the city and to the region. In total, the upgrading includes roughly 950 guest rooms and suites (38% of the total rooms in Downtown) with an approximate coast of $45 million to be spent between 2014 and Additional tax revenue/year $230 million 15

16 The extent of renovation ( ) Hotel undergoing renovation in Downtown 8 out of 13 Renovated guest rooms and suites 950 Percentage renovation in the Downtown guest rooms 38% Emergence of concierge floors Probable market share to be captured by the renovated hotels (excluding the new hotels) Estimated cost of renovation 65 rooms 83% $45 million The upgrading is consistent with the economic circumstances including the low cost of construction, the low workload of the construction industry and the decline of the Canadian dollar, which will lead to an increase in the international visits as well as in the domestic and regional pleasure travel. The destiny of the Delta Edmonton Center Suite Hotel It is rumored that the Delta Edmonton Center Suite Hotel will be closed or be transformed once the new Delta located in the Arena District is ready. However, as for now, there is nothing concrete about the news. On the other hand, the coexistence of the two Delta hotels increases the diversity inside the brand. Collaboration is also possible and can be beneficial since it increases the capacity of the Delta make in Downtown and allows hosting bigger groups. Metamorphosed extended-stay hotels Edmonton House (2009) and Alberta Place (2014) conversion into rental apartments speaks to the strong viability of rental units in the Downtown core as the rental market is tight, vacancy rate is low and Downtown population is growing at a fast rate. Meanwhile, a new category of extended stay hotels is emerging. Indeed, Downtown Edmonton offers few available locations such as the Icon Tower, The Century, The Cobogo and Edmonton House where visitors can rent fully furnished and served condominiums for 7 days or more. IMPROVEMENT OF THE ACCESS TO THE CITY AND TO THE DOWNTOWN Facilitating the access to the city and particularly to the city center is a priority since 65% of the potential visitors agree about the importance of transportation when choosing the location of their stay. (DBA survey 2015) Improving the access to the city: Edmonton International Airport EIA has been Canada s fastest growing airport over the last decade. The airport has a master plan for a huge development ( ) including not only the extension of terminals (150,000 m2 in 2012 and 65,000 m2 in 2008) and the improvement of transit form the airport to the city and the Downtown but also the development of a third runway, which will insure a sufficient capacity for the growing number of visitors. The master development plan coincides with an increase in the non-stop flights number connecting Edmonton to North America, the Caribbean and Europe. In addition to the direct flight Edmonton-Iceland introduced in 2014, recently, another non-stop line has been introduced to join the 61 existing 16

17 flights on the market. The new Edmonton-Amsterdam line will operate 4 times a week. Non-stop lines contribute to the prosperity of international tourism, which can be seen through the exceptional growth in international air passengers in 2014 (due to the Edmonton-Iceland line) and during the first quarter of 2015 reaching 21.8% in April and reflecting the impact of the new direct TOTAL INCREASE IN AIR-PASSENGERS: EIA 6.4% 7.0% 6.0% 4.6% 5.0% 4.0% 3.0% 5.0% Improving the access to downtown Access Downtown from the South: > The Walterdale bridge replacement: The old bridge has reached the end of its service life and needs to be replaced. However, the substitution project targets an optimization of the bridge capacity and will put in place a bigger bridge with 3 traffic lanes as well as well a path for pedestrians and cyclists. Constructions on the new $155 million replacement project began in 2013 and are expected to end by fall > The new LRT Valley line : (South East to West) Approved in 2012, the total capital cost for the Valley Line LRT is $1.8 billion shared among the City of Edmonton, the Government of Alberta and the Government of Canada. Major constructions on the project are expected to begin in early 2016, and the Valley Line is expected to open to the public by the end of Access Downtown from the North: > The LRT Metro line: The Metro line is a $700 million project expected for It will link Downtown to the NAIT and facilitate the access to the city center from the North. 2.0% 1.0% 0.0% GROWTH IN THE INTERNATIONAL AIR-PASSENGERS: EIA 18.0% 16.3% 16.0% 13.1% 14.0% 12.0% 10.0% 8.0% 6.0% 4.1% 3.4% 4.0% 2.0% 0.0% First Quarter of

18 Access Downtown from the East: > West Rossdale Arterial Roadway Improvements: The project is in its design phase and includes modifications and streetscaping at Bellamy Hill, 103rd street, Rossdale Road, 97th avenue and 105th street. The plan includes utility servicing needs associated with the arterial roadway modifications in the West Rossdale Area. Concept planning and preliminary design are completed. Access Downtown from the West: > Stony Plain Road Improvements: Stony Plain Road is emerging as one of West Edmonton s key destinations. In 2013, the City began streetscape improvements to help make Stony Plain Road more accessible, better designed and pedestrian-friendly. > The 102nd avenue over Groat Road Bridge replacement: With a budget of $32 million, the old bridge will be replaced. Construction started in July 2014 and is anticipated to finish in fall > The River Valley/Groat Road interchange: The City of Edmonton is developing a long-range concept plan for the River Valley Road/Groat Road interchange. The earliest construction could start on this project is 2016, and only if funding becomes available. THE ALIGNMENT OF CONSUMERS EXPECTATIONS AND THE SERVICES/ ATTRACTIONS PROVIDED The demand: On the one hand, according to Alberta Tourism, Parks and recreation, and Travel Alberta, the demand for special attractions and tours, special events, the urban experience and the cultural tourism is high. On the other hand, the potential consumer preferences evaluation highlights that 77% of the potential pleasure travelers prefer to buy a package Jasper -Edmonton instead of just visiting Edmonton, 88% of the potential visitors believe that festivals are attractive and can influence their decision making, 62% are looking for a cultural experience and 44% are interested in the urban experience (DBA survey, 2015). The supply: Special attractions and tours: Tourism operators focus on organizing trips around the province. Between 2013 and 2014, 12 tours operators were created and their impact was prominent since Jasper s visits growth is expected to increase from 2.5% to 11.1% between 2013 and Special events Downtown: Downtown Edmonton: a national leader in sport tourism: The sport tourism is expected to flourish partly due to the development of the Oiler s new home, the Arena, with its 18,641-seat Rogers Place. ICE District is expected to attract over 3.7 million visitors every year including 2.2 million visits to the Arena and 750,000 visits for each of the major movie theater and the casino. 18

19 POTENTIAL VISITORS PERCEPTION OF FESTIVALS Attractive 88% Not attractive 12% PREFERENCE FOR PLEASURE TRAVELERS Edmonton and Jasper Edmonton The impact of the Arena on the Hotel industry will be huge. Indeed, the number of reservations around the Arena is expected to grow and the Downtown core will attract a new category of visitors and probably larger groups since the capacity of the Downtown will increase by almost 25%. 23% 77% In addition, Edmonton is a pioneer in hosting sport s events. We were the first Western Canadian city to host the Red Bull Crashed Ice event, which attracted 70,000 fans to Downtown and generated $8.5 million in economic spinoffs for hotels, restaurants and shopping malls (Edmonton Tourism). Few other sports events are planned such as the Track and Field Championships, the 23th Edmonton Marathon, and the FIFA U-20 Women s World Cup of Soccer. Downtown Edmonton: Festivals home: It is not by chance that Edmonton is referred to as Canada s festival city. In fact, the city attracts 2 million festivals visitors a year. Majority of the events occurs Downtown (37 festivals/year) and includes A Taste of Edmonton that attract 500,000 fun each year, The Work Art and Design Festival capturing, since 1986, over six million visitors, and the International Street Performers Festival getting 250,000 visits a year. The vibrancy brought by the festivals impacts the direct spending, employment opportunities and hotel booking. Downtown Edmonton: the urban experience: Downtown streets are vibrant night and day. Roughly 90,000 persons work in Downtown, 65% of the offices in town are located in the Downtown core and 60% of the residents are under the age of 34, which creates a pleasant 19

20 night life and a growing number of restaurants and bars (DBA report, 2014). The city center is also undergoing both a demographic and economic boom with 20.4% population growth between 2011 and 2014, and $2.6 billion worth of building permits issued in The city center also offers a unique culinary experience. With 324 eating houses, almost 15% of the total restaurants in town, Edmonton city center has the highest restaurant density in town. The restaurants satisfy diversified tastes: tourists can enjoy Asian, American, African, Brazilian, Canadian, Chinese, Japanese and European food. For shopping lovers, Downtown Edmonton would be the ideal destination. It offers not only the convenience to access the biggest shopping mall in North America (WEM) with its 800 stores in less than 20min but also a unique urban experience with a variety of retail stores in different locations including Manulife Place (22 stores), Commerce Place and City Center shopping mall (170 stores). The new LRT network development gives the opportunity to shop in about 300 additional stores (Kingsway and Southgate malls). Downtown Edmonton: the cultural experience: Beside the variety of restaurants, the vibrancy and the urban experience, Downtown Edmonton is and will be the place to enjoy arts and enrich the culture. In fact, 82% of the museums in the region are condensed in a 20min radius from Downtown (considering the new location of the Royal Alberta Museum). Museums exhibit the history, the art and the technological heritage of the region. In addition, The Art District, City Hall, Churchill Square and The places receive festivals, events, and exhibitions; therefore, attracting not only tourists but also locals. Downtown Edmonton has even more to offer since it is hosting new projects that will enhance the cultural and artistic experience, and make our city center more enjoyable. The development of the $340 million new Royal Alberta Museum: Other than being the largest museum in Western Canada, it will bring more vibrancy to the Downtown. The new museum is expected to open late 2017, to be twice as big as the Glenora one and to have two new wings for natural and human history. The Galleria: A project proposed by The Edmonton Downtown Academic and Cultural Centre Foundation and located on 103rd A avenue, across from City Hall and adjacent to the new Royal Alberta Museum. The $200 million project includes 300,000 sq. ft. of performing art space, 4 theaters with 2650 seats, the new Royal Alberta Museum and the school of music, art and design of the University of Alberta. Kelly-Ramsey Building: The new Financial District Tower in 25 years located at the intersection of 100th street and 101st A avenue, the $250 million project will offer a unique combination of a glass office/retail tower and a four storey facades of two historical buildings. The 25-storey skyscraper in under construction and will be completed by the end of The art is flourishing in the Quarters: The Armature development will be along 96th street between Jasper avenue and 103rdA avenue, and will 20

21 see the street turned into a pedestrian-friendly open space and park. It will host public art, outdoor cafés, and street festivals year-round while providing opportunities to showcase sustainable design such as green roofs and rain gardens. The $27.2 million project is expected to be ready in The Artists Quarter is a $30 million building on the North-West corner of 102nd A avenue and 96th street where artists can live and work in 64 studios.other housing, performance studios and offices for arts group are planned as well. Conclusion: the aligned supply and demand It seems that the tourism development is focused on the consumer preferences including events, tours, cultural attractions and urban experience. The alignment of the consumer expectations and the existing services as well as the upcoming projects argues for the potential growth of the hospitality industry in the Downtown core. MARKETING AND PROMOTION Engage the community Edmonton Tourism launched, in 2014, the Destination Activation (DA) Initiative in collaboration with the City of Edmonton, Edmonton Destination Marketing Hotels, The Edmonton Chamber of Commerce, EIA and Old Strathcona Business Association. The DA program is aimed to bring events to life by creating a Buzz, and to differentiate Edmonton as a city that fully embraces the excitement around major events. It also engages Edmontonians in the festivities and communicates a new image of the city. The initiative will cover the Canadian Finals Rodeo, FIFA U20 Women s World Cup Canada 2015, World Triathlon Grand Final Edmonton, Canadian Country Music Association Awards, Tour of Alberta, and events in support of the winter city strategy. Marketing and advertising Edmonton Tourism, in collaboration with Travel Alberta, is dedicated to increase the exposure of Edmonton and the province as a whole. The organization is working on attracting group of tourists, spreading information about the city on the Net, selling group trips, organizing conferences and events and improving the satisfactions of both visitors and service providers. In return, a dollar invested in this program generates 2.35 dollars in revenue for the tourism industry (2015). In 2015, the marketing and advertising budget is estimated at $9.3 million and is expected to generate $22.32 million with a major share coming from the Downtown core (concentration of museums, bars, restaurants, festivals and events). line Edmonton- Amsterdam (Alberta Tourism Market Monitor, ). Hotels downtown will contribute by at least $1.5 million. 21

22 REFUTE MISLEADING PERCEPTIONS AND REPOSITION THE DOWNTOWN Major reasons discouraging visitors from staying Downtown are: a perceived high Average Daily Rate, the lack of options for hotels, unsafety in Downtown, and parking and traffic issues. (DBA survey, 2015) Is the Average Daily Rate high? In 2014, among the five biggest cities Downtowns in Canada, Downtown Edmonton had the lowest Average Daily Rate. AVERAGE DAILY RATE FOR THE 5 BIGGEST CITIES DOWNTOWNS IN CANADA Edmonton Calgary Vancouver Montreal Toronto $ $ $ $ $ $100 $120 $140 $160 $180 $200 $220 $240 Additionally, the Average Daily Rate of Downtown Edmonton ($146.19) is almost equal to the Average Rate of the province estimated at $ in Even the new opening hotels are suggesting competitive prices lying within the range of the existing tariffs. The lack of options: a concern soon to disappear The two new hotels, in addition to the huge renovation work in the hotel industry, will provide not only a 25% increase in capacity but also additional services and upgraded facilities including roughly 950 guest rooms at an approximate coast of $45 million. Safety: Downtown s unsafety is just a Myth! Downtown Edmonton is still perceived as an unsafe location. However, Edmonton Police Service is strategically acting since 2007 to improve the Geographic Deployment. Consequently, the total Per Capita crime occurrence declined by more than 50% between 2007 and 2013 (DBA report, 2014) including 69% drop in property crimes and 22% decline in violent crimes (Global news, 2013). Besides, 40 officers have been added to the Downtown core. Patrols cover the whole Downtown 7 days/week and use different means including bicycles, cars and segways to increase the efficiency of operations. EPS is also developing a proactive strategy by assessing some efficient models used in other cities such as Toronto, Vancouver and Columbus. Improving the capacity, quality and convenience of public transportation is the Solution for the parking and traffic issues: Capacity: The LRT ridership increased by 133% over the last decade to reach 100,760 passengers with 30,930 (roughly 30%) boarding from and to Downtown in

23 Also, bus ridership and the combined (LRT-Bus) ridership grew by respectively 27% and 10% in the last decade. Public transportation users number is expected to rise with the extension of the train network including The Metro Line and The Valley Line. The Metro Line will serve more than 13,200 passengers on a weekday, and with its North-West extension, it will serve up to 45,000 additional riders while The Valley Line will provide a capacity of 5,000 passengers per hour in each direction, increasing the ridership by an average of 31,500 and up to 42,000 per weekday. Convenience: A protected bike route will be developed on the 102nd avenue between the 96th and 111th street. It will offer the opportunity to bike safely Downtown and to enjoy the vibe of the city. Additionally, Pedways will be extended by 40% once the Arena District development is completed. The expanded LRT network will cover the whole city and reduce parking and traffic issues. Quality: The quality of transportation is undergoing a huge improvement after the introduction of the Smart Bus Project, a $14 million project approved in 2011 and allowing buses to transmit real status reports. Cameras will be installed as well. The project is a great step to insure reliability, safety and quality in managing the 1,000 buses in circulation. ''Facts matter not at all. Perception is everything. It is certainty.'' 23

24 CONCLUSION RECOMMENDATIONS FOR EXCELLENCE The hotel industry is following the growth rhythm of the Downtown core. It is impressive to see the performance growth. It is also great to hear about all the projects, efforts and investments in the industry. Between 2014 and 2018, at least $250 million have been and will be spent in hotel development, which could generate up to $280 million in tax revenue/year and $570 million in direct expenditure in the hospitality industry including up to $130 million in hotel revenue/year. Also, the development strategy seems to create a favorable environment to the flourishing of the hotel industry. Organizations believe in the Downtown Tourism success and the DBA advocates the Downtown core as the place to STAY. INCREASING THE CAPACITY AND IMPROVING THE QUALITY OF SERVICE Even after the completion of the two new hotels, the accommodation capacity of Downtown Edmonton would be still lower than that of the 5 biggest cities' Downtowns in Canada. Number of Hotels Percentage of total hotels in town Downtown Toronto % Downtown Montreal % Downtown Vancouver 87 65% Downtown Calgary 25 22% Downtown Edmonton 15 18% Increasing the supply can have a huge impact on the tourism industry. In fact, it gives the visitors a large choice and induces a constructive competitiveness that would impact the quality and the image of the Downtown core. While, higher capacity can attract bigger groups especially that Downtown Edmonton is hosting many big events, a better quality can induce longer stays. WORK ON EXTENDING THE STAY The average stay length in Edmonton is 2.9 days while it is around 3.5 days in Calgary. People need to know about the attractions offered by the Downtown, bring their families and stay longer. 24

25 Organizations and hotels should coordinate activities and events then communicate diversified programs to the guests. It is also possible to offer reduced prices for long stays or special promotions for the weekends. DEVELOPING THE BUSINESS TOURISM Even though the overall performance and growth of Downtown Edmonton are the best in the province, the study of the Calgary market shows that Calgary attracts more Business visitors (21% of the overnight stays against 15% in Edmonton). It is sure related to the nature of the economic activities in Calgary; however, promoting and advertising the conference centers in Downtown can help increasing business visits. Improving the Business Tourism requires an adequate infrastructure including comfortable hotels and meeting/conference centers. The two new hotels are able to satisfy these needs, along with the Shaw Conference Center, by offering additional 32,000 sq. ft. of meeting spaces associated with a good quality of service. For instance, in 1995, the open sky between the US and Canada led to 25% increase in traveling (pleasure and business). > Reducing the Visa Barriers allows International Tourism to flourish. > Revitalization of the River Valley: the revitalization of the River Valley should start by shaping the River Valley funicular and public staircase approved in May, 2015 by city council. The second step is to make the valley a touristic attraction (restaurants, bars, shop ) with an access to some touristic sites such as the legislature. > The Use of back alleys for street art would help branding Edmonton as the city of arts, culture and events. Improving and exploiting the back alleys should not be limited to as isolated pilot project on the 104th and 105th streets. We should get inspiration from Melbourne where the graffiti art in the back alleys branded the city as the stencil capital of the world. RAISE LOCAL AWARENESS AND INCREASE MARKETING Unfortunately, only 15% of the surveyed potential visitors know about Downtown Edmonton attractions well (DBA, 2015). Therefore, intensifying the marketing, promoting and advertising the destination is a priority to increase the visits. Making people talking about the city is a way to increase its exposure as well. CHANGING POLICIES > Liberalization of the air access, introducing an open sky between Canada, Europe and emerging economies, and allowing low cost companies to operate in Canada. Consequently the number of travelers would increase. 25

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