Hotel profits in Canada are expected to drop by a quarter in 2008 to C$822m, due to fewer travelling Americans.

According to business analyst Conference Board’s Canadian Industrial Outlook: Canada’s Accommodation Industry – Winter 2008, the strength of the Canadian dollar makes it a relatively expensive destination.

“The gap between spending in Canada by foreign residents and spending in foreign countries by Canadians is steadily growing,” the report says.

“Canadian travel spending in foreign countries is also increasing at a stronger pace than domestic spending.”

The widening gap between Canadian spending abroad and foreign tourism spending in Canada is limiting the profit outlook for the accommodation industry over the next four years.

In addition, labour shortages are constraining the industry’s profitability as tight labour markets push up wages and increase labour costs, the report says.

By Elizabeth Clifford-Marsh