Hosting the World Cup hasn’t exactly been a windfall for Toronto-area hotels.
According to data compiled for the Greater Toronto Hotel Association, the percentage of GTA hotel rooms occupied during the first two weeks of the world’s biggest sporting event is down substantially compared to the same period last year, raising questions about the economic value of hosting.
In the week ending June 13 — which included Canada’s tournament opener against Bosnia and Herzegovina — the overall occupancy rate for area hotels dipped to 82 per cent, down from 83 per cent in the same period last year.
In the week ending June 20 — which included Ghana vs. Panama and Germany vs. Cote d’Ivoire — occupancy rates plunged to 72 per cent, down from 86 per cent at the same time last year.
“I don’t think it’s terrible, but the reality is we’ve displaced meetings and conventions because of FIFA,” said Sara Anghel, CEO of the GTHA. “There’s still a lot going on in this city, so it’s not a worst-case scenario. The Jays are playing, and there’s Pride. The city is alive.”
Until June, things had been looking up for the hotel industry, Anghel said, noting that occupancy in May was higher than it was the same month last year.
Anghel is still hopeful the summer can be salvaged with a stronger showing in July and August, suggesting that some tourists may have simply booked their visits to avoid being in town during the tournament.
FIFA cancels thousands of ‘block holds’ in April
In April, FIFA cancelled thousands of tentative hotel bookings at area hotels, cutting into some of the rosier pre-tournament projections. The so-called “block holds” were meant for FIFA staffers, journalists, and other “stakeholders.”
Victor Matheson, an economist who specializes in studying the sports industry, said the shrinking hotel numbers should be a reality check for anyone who’d been hoping the World Cup would be a big boost to Toronto’s economy.
“Hotel occupancy is about as good a proxy as you’re going to get for measuring economic impact, because it’s guests from out of town who you’re going to want the most,” said Matheson, a professor of economics at College of the Holy Cross in Worcester, Mass.
A study prepared by Deloitte for FIFA said the tournament will generate $940 million in “economic output” in the Greater Toronto Area and $3.8 billion across Canada, but Matheson says the report is “pure propaganda.”
Those numbers are misleading, said Pedro Antunes, chief economist at Signal 49 Research, formerly known as the Conference Board of Canada.
“Economic output basically counts transactions twice,” said Antunes, who added that even using the more conventional method of counting economic impact — gross domestic product — it’s still impossible to know just what the tournament will bring to Canada in general and Toronto in particular.
‘It may have been a weak year for tourism anyway’
“We don’t know what the counterfactual would have been,” said Antunes. “It may have been a weak year for tourism anyway. If the World Cup hadn’t happened, we might have had occupancy rates that were even lower.”
While the tournament has given a bump to bars and restaurants showing World Cup games, they likely would have gotten that bump no matter where the games were being played, argued Ryan Mallough, vice president of legislative affairs at the Canadian Federation of Independent Business.
“The locations close to the stadium, or hosting a watch party, those places are doing well. But they always do well during the World Cup,” said Mallough. “Are we seeing a broader impact from additional tourists? Not yet. We haven’t heard any roaring success or catastrophic failure.”
While some tournament backers have also said that hosting six games also gives Toronto a global marketing boost, Matheson said that’s a stretch, especially because the tournament is being hosted across Canada, the U.S. and Mexico.
“The effect is diffuse, because the attention is split between 16 cities,” said Matheson, who added that even when an event like the World Cup or Olympics is hosted in one city or a compact area, the marketing boost doesn’t do much for the hosts.
Toronto not the only host city struggling with bookings
“The evidence shows that fans who see these events on TV decide they want to go to the next World Cup. They don’t say ‘hey, let’s go to Toronto.’”
Still, said the GTHA’s Anghel, it’s not like Toronto is the only host city who’s struggling with hotel bookings.
“You can ask Los Angeles the same question, you’re going to get the same answer,” said Anghel. “All 16 cities are having the same experience. They didn’t get what they were expecting.”
