Travel industry profits to reach a new high for second year, says Conference Board

OTTAWA (CP) - Strong travel spending by Canadians and healthy price increases will enable Canada's hoteliers to post their second consecutive year of record profits in 2007, according to a study by an economic think tank. "After three years of improvement, accommodation profits are expected to rise slightly to $982 million in 2007," said Michael Burt, senior economist at the Conference Board.

"However, with labour shortages and the resulting increases in wage costs limiting profits, the industry can expected weaker profits next year," Burt said.

The study results are reported in the Conference Board's "Canadian Industrial Outlook: Canada's Accommodation Industry - Summer 2007."

An ongoing decline in foreign spending on accommodation is also limiting the profit outlook.

Although visitors from countries other than U.S. rose in 2006, the declining number of U.S. visitors caused real foreign spending on accommodations to fall. This trend is expected to continue, in part due to the surging Canadian dollar.

However longer term, strong growth in domestic travel spending will continue to support the industry.

Finally, the Vancouver Olympics in 2010 are expected to provide a boost to the industry's performance.

© The Canadian Press, 2007