Performance measures for January to June 2022 indicate that Kelowna and the Central Okanagan’s tourism industry has performed well in the first half of the year. Overall, industry indicators have increased compared to the last two years (during the COVID-19 pandemic) and are close to 2019, which was our highest, benchmark year. While we are confident about the forecast for the second half of 2022 and into 2023, we continue to closely monitor national economic conditions that may impact consumer spending and travel behaviour.
2022 Industry Performance (January - June 2022)
Hotel Occupancy and Revenue Indicators
Overall hotel occupancy levels are returning close to 2019 levels and accommodation rates have increased over 2019 levels.
- Average hotel occupancy was 56.8% through the first 6 months of 2022, compared with 33.9% in 2021. For the first six months of 2019, average hotel occupancy was approximately 63.9%; however, since then, Kelowna has added additional hotel room inventory and we estimate this year's booking volume to be pacing just slightly behind 2019 levels.
- The Average Daily Rate (ADR) for the first 6 months of 2022 was $165.96, compared with $125.87 in 2021 and $140.22 in 2019.
- RevPAR (Revenue Per Available Room) for the first half of this year was $94.29, compared with $42.65 in 2021 and $93.05 in 2019.
- Short-term rental occupancy is down slightly compared to 2021 but is up compared to 2019. The number of short-term rentals and the average price of the rentals are also increasing.
At this time, we estimate visitation numbers for the first six months of the year to have increased over the same period last year and are in line with 2019 visitation. Monthly visitation numbers for 2022 will be updated and released later in the year; however, general information supports visitation numbers growing steadily month-over-month, peaking over the peak-travel summer months.
We closely monitor where our visitors come from and note any patterns and trends. We estimate the vast majority of our visitors continue to be from nearby markets (BC and Alberta); however, we are noting increased visitation from further out markets as well (Ontario, Quebec, United States). A small percentage of international visitors started to return in mid-2022.
Visitor interest and inquiries through our website and visitor centre surpass 2019 numbers. This confirms predictions that travel would be strong despite current economic challenges.
2022 Industry Outlook (July - December 2022)
Our outlook remains positive for the remainder of the year, however, we are monitoring several items that may impact visitation and spending levels.
Increased Cost of Living
Increased costs related to transportation, food, housing, and other costs will impact consumers' interest and ability to spend on discretionary activities, including travel. Inflation and increased interest rates are also a factor. As costs rise, spending slows.
While we have not seen a severe drop in spending as of yet, we are observing that those travelling now are adjusting their spending by seeking out activities that have no cost or are lower cost and are looking for savings or incentives whenever possible. Consumers are still travelling but are making cost-cutting decisions. Tourism Kelowna will provide information and content that continues to encourage visitors to continue to fill their itineraries with rewarding experiences, and will also provide information on easy ways to save money while travelling, including booking mid-week stays at local accommodations.
Tourism Kelowna conducts a comprehensive visitor intercept survey every three to four years to collect first-person visitor data, including spending. We conducted the first session of our 2022 survey in spring and are currently collecting our summer data on spending. This information will help determine and analyze visitor spending in 2022 compared to past years. That research will conclude and be released in mid-2023.
- Visitors are noting the higher cost of travel and accommodations, and this is also impacting overall satisfaction scores. Tourism Kelowna cannot directly dictate pricing or control travel costs; however, we want visitors to feel a good sense of value for the time and money they spent in our destination, so they want to return and encourage others to visit, too.
Recession-Risk Impacts Future Spending, Trip Planning, & Travel Behaviours
- Industry analysts have noted the potential for a recession; however, it is predicted it may be shorter or softer than experienced in past. However, it impacts household spending as consumers may opt to hold onto money rather than spend it. A recent Ipsos Reid study noted nearly 50% of Canadians are deliberately spending less on discretionary items (now and into the future).
- We will closely monitor the potential impact on bookings in 2022 and into 2023.
- With consumers watching their spending and also keeping a close eye on public health and weather considerations, the window for booking continues to shorten. Many travellers are choosing to make decisions closer to their travel date (if they can find a deal), rather than plan well in advance.
Forecast & Observations
- We expect strong visitation numbers through the summer months and into the fall, though we do not expect them to surpass 2019 levels. Local accommodators’ bookings are solid through the summer months, but several are reporting consumers are reacting to price and also watching weather conditions closely.
- As international travel opens up more, travellers are using saved money (or saved loyalty points) to take postponed trips from the past couple of years. Many consumers are travelling further (and more often) than in past years. Someone that stayed in BC and visited Kelowna and the Okanagan in the past years may feel more comfortable travelling internationally this year and may opt for a vacation abroad.
- The outlook from local tourism businesses is generally positive but mixed to some degree. Some local tourism businesses and accommodators are indicating 2022 is expected to be their ‘best-ever’ year and set a new benchmark, while others indicate occupancy and revenue are returning, but not yet surpassing pre-pandemic performance.
- Meetings, conferences, and events are returning but more slowly than leisure travel. Watch for another industry news post with further information and analysis on that important market segment.