The News: SARS May Provide Guidance on Swine Flu

The impact of the Swine flu epidemic on the hotel sector may be too early to gauge, but a recent report by HVS Hospitality Services, authored by Ann Lloyd-Jones, looks back at the severe toll the SARS epidemic had on the Canadian, and more specifically Toronto’s, lodging market.Severe Acute Respiratory Syndrome first appeared in Asia in February 2003. While the virus surfaced in 37 countries, most cases were in Asia. The only country outside of Asia to report a significant volume was Canada, most of them concentrated in Greater Toronto.Canada’s lodging market was strongly affected by the SARS outbreak. As of March 15, 2003, the World Health Organization had reported seven cases and two deaths in Canada, and the WHO identified Toronto as an “area with recent, local transmission,” indicating that the cases are spreading internally within the region rather than arriving via visitors to the area.For 2003, lodging demand in Canada fell 4.7 percent, more than double the decrease recorded in the 2001 recession and 40 percent higher than the United States’ 2001 recession.The epidemic’s effect on Toronto was more dramatic. According to Smith Travel Research figures, demand fell 36.5 percent from April 2002 to April 2003. Although April showed the steepest year-over-year decline, the market continued to experience demand falloffs of more than 20 percent through July, and year-over-year demand continued to register decreases through November.From April through November 2003, the market reported over 257,000 fewer accommodated-room nights than in the same period of 2002, a revenue loss of more than $83 million. Over the full year of 2003, demand was off by just over 220,000 room nights, and revenues were off by $80 million.If there is any good news, it is that demand lost to what Lloyd-Jones calls “discrete phenomena,” such as a flu scare, can be recovered fairly quickly, though not as quickly as it can be lost. The total 2004 occupied room nights in Toronto exceeded the number of room nights occupied in 2002, indicating that the market was able to recover the ground lost during the SARS scare relatively quickly.