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SOMBA K'E/YELLOWKNIFE
Recent renovations made to hotels in downtown Yellowknife have raised the quality of the guest rooms in the city "to a new level," hotel valuation services organization HVS is reporting.

The firm, which provides economic studies and appraisal for hotels and motels across the country, noted significant capital improvements to the majority of downtown Yk hotels, including the Coast Fraser Tower Suite Hotel, the Explorer Hotel, the Chateau Nova Inn and Suites, and the Yellowknife Inn, have increased the rate ceiling in the marketplace, and the outlook for future average daily rate growth is strong, according to report author Eric Wright.

"The quality of product in Yellowknife has continued to improve," Wright told Yellowknifer. "If you look at the hotels downtown, they've continued to renovate and put money back into the product, and some of those hotels, the quality is quite high and they're getting demand that's actually willing to pay that high rate for that high quality product.

"As soon as you see those renovations, that generally relates in them being able to command a higher rate."

Capital improvements made to downtown hotels include the remodelling of three floors at the Coast Fraser, new beds to be placed in the suites by the summer, new flat screens, curtains, desk chairs, and carpets, general manager Catherine Travis said.

Yellowknife Inn underwent major renovations to its exterior in 2008, and this year, has improvements slated for its lounge and banquet areas, said manager Derek Carmody.

Chateau Nova has just completed phase one of major renovations at the Franklin Avenue hotel, including the replacement of all furniture, the addition of king-sized beds, new carpets, painting of the exterior of the building, and the installation of a brand new wireless Internet system, said Jenni Bruce, general manager.

Phase two of renovations will include new carpeting for the suites across from the main Chateau Nova building, and new flat screen televisions, "which is an amazingly high expense," Bruce said, pegging the hotel's total improvement expenditures at $2 million to $3 million.

"At the end of the day a hotel should renovate about every five years," Bruce said, noting Chateau Nova was overdue since the last major renovations about seven years ago.

"Today's traveller gets more and more sophisticated and they are demanding value for their money.

"The Explorer Hotel is a real trendsetter for the renovations," Bruce added, noting the hotel renovates about every two years. "Which forces us to toe the line."

Hoteliers are able to put money into capital improvements partly because the city was "pretty resilient" through the recession, Wright said.

"They weren't hit as hard as some of the markets we've seen across Canada," he said. "Their base level demand didn't go away, so that drop in demand just didn't really happen as high as it did in other markets."

Yellowknife hotels saw occupancy of 69 per cent in 2011, according to the HVS report, up from 59 per cent in 2010, 58 per cent in 2009, and 62 per cent in 2008, before the recession hit.

Average room rates dropped from $149 in 2008 to $142 in 2009, back to $149 in 2010, and climbed slightly in 2011 to $150.

Whitehorse, the only other centre in Canada with comparable geography and similar demand generators, saw occupancy rates of about 63 per cent in the past three years, and commanded average room rates of just $105 in 2009, $108 in 2010, and $112 in 2011.

"The fact that Yellowknife is able to command that much higher a rate is quite significant when you look at the two markets," Wright said.

After the healthy rebound in 2011, the 2012 outlook for Yk hotels is also strong, Wright said.

"Certainly when I was in the market at the very end of 2011, all the hoteliers were very optimistic," he said.

"They had a good book of business for 2012, they were all looking to push rates, and they were all very, very optimistic on where the hotel market was going."

Travis said the Yk hotel market is very much in line with each other, and she does not anticipate rates will increase noticeably.

Raising rates is a "delicate balance," Wright said, adding because occupancy has not been negatively affected by rate increases in the past few years, that Yk hoteliers are "handling it correctly.

"They're keeping the heads in beds, and at the same time they're driving their top line revenues, and so when it's being done like that, there's no downside."

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