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When you are running a business, you should closely monitor your cash flow because this is the lifeblood of your enterprise. As much as possible, you should ensure that the income you are generating exceeds the expenses that you have to cover. Otherwise, your business may not thrive in a market that is stringent with competitors. This entails the need for you to be prepared for certain emergency expenses such as those listed below.
One of the primary things that you need to prepare for is the event of natural disasters. No matter how detailed your business plan is, if you don’t encompass the expenses that you can incur in the event of typhoons or storms that can be damaging to your business, then you may encounter a significant setback later on. This is where financial modeling and analysis prove to be beneficial because, through this, you will be able to factor in the costs that you need to prepare, and where you should get it, for insurance payments depending on your location. For instance, if you are located in an area where forest fires are imminent, then the insurance costs you have to pay may be more compared to a low-risk area.
Another emergency expense that your business needs to prepare for is equipment breakdown. No matter how well you maintain the machinery and equipment you use for your business operations, there are instances wherein these just suddenly break down. Make sure that you have built sufficient emergency funds to cover the costs of their repair or replacement to ensure that your business operations won’t be interrupted. Otherwise, make sure that you have the proper insurance coverage for this scenario as well.
You should also prepare for employee turnovers which can be quite unpredictable. For instance, you may have a long-term employee who suddenly needs to resign because of various personal reasons. While there may be a certain notice period that will give you ample time to look for a replacement, you have to keep in mind that you can incur a significant cost in the hiring process. For this reason, you should also factor this in when you analyse the finances of your business.
Finally, your business should also be prepared in the event of an economic downturn that can be triggered by various factors. For instance, a global pandemic may plague various countries for a number of years and this can have a negative impact on your business. Apart from proper planning and financial forecasts, you should also come up with innovative ways on how your business will be able to adapt to these kinds of unfortunate circumstances.
Some of the emergency expenses that your business needs to prepare for include natural disasters, as well as equipment breakdown, and employee turnover. You should also prepare for an economic downturn by building ample emergency funds for your business. In this way, you will be able to preserve and continuously run your business even with the occurrence of these unforeseen circumstances.
Like any other industry, the dental industry possesses its very own set of accounting and tax rules that need to be complied with. If your plan is to start a career in dentistry or are already providing healthcare services as a professional dentist, it is best to search for the services of a professional accounting firm.
As a practitioner of dental services, taking care of the patients should be the first priority but, managing the accounting and bookkeeping can also intervene sometimes and can be considered a priority as well. Due to this, it is imperative to choose the appropriate dental CPA firm. A good accounting firm should provide dental practice accounting services to free hardworking dental practitioners from back-office duties in order fot them to be able to concentrate on working with patients.
An experienced CPA organization offers reliable accounting services tax reduction planning to sustain all kinds of dental practices, such as family dentistry, as well as oral surgeons and also orthodontists. A good service will take care of the responsibility of maintaining the accounts meticulous and precise. Nevertheless, the client should also make sure to always be in control when it comes to finances. The detailed financial reports a good accounting firm offers should empower its clients to effortlessly supervise matters such as cash flow and accurately trail expenses in order for the practice to function smoothly and maximize revenues. Another important aspect that should be taken into consideration is employing benchmarking to evaluate the client’s practice by comparing it to others and shed light on the point where improvements need to be made in order to bring more value to the business in question.
When talking about taxes, a good accounting service recognizes that less is more so it creates a comprehensive tax planning strategy in order to lower tax liabilities for the dental practice. Additionally, at tax time, the firm should also use every deduction available to be certain that the clients acquit the lowest amount of tax allowed by current regulations.
What expenses can be claimed by dentists for tax-related purposes?
• The costs of goods purchased for reselling or consumption purposes (such as filling materials, vaccinations, or even mouthwash)
• Staff costs such as wages and salaries
• Rent, rates, power, and insurance costs
• Travel costs inquired for business purposes
• Repair and maintenance of property and equipment
• Phone, fax, stationery, and other office costs
• Advertising and business entertainment costs
• Bank interest and other loans
• Bank, credit card, and other financial charges
• Accountancy, legal, and other professional fees
• Other business expenses
• Trading and property allowance
The qualities of good dental accounting services
• Availability-A good accounting service understands the significance of a client’s time
• Knowledge and expertise- A good accounting service is picked based on experience in the domain of expertise
• Online facilities- A good accounting service implements an online portal in order to enable the clients to upload and complete accounting details
• Transparency- A good accounting service offers transparency in its fee structure
A new health IT partnership aims to improve clinical data quality and thereby increase the volume of data available for care quality measurement.
The partnership will combine Chicago-based Apervita and Farmington, Connecticut-based Diameter Health’s expertise to provide payers, providers and other healthcare stakeholders with access to clean clinical data for value-based care delivery, said Rick Howard, Apervita’s chief product officer, in an email.
“The healthcare industry has no shortage of data, but the way it’s leveraged continues to be a challenge for both quality measurement and for supporting value-based contracts,” he said.
Apervita provides stakeholders with the infrastructure necessary to develop value-based care models.
Per the new partnership, the company’s quality measurement and value optimization solutions will leverage Diameter Health’s Fusion engine to clean healthcare data in multiple formats, including clinical, claims, behavioral health and laboratory data, Howard explained.
The clean data can be used to glean performance insights that are needed to develop value-based contracts between providers and payers.
Diameter Health’s technology ingests raw — that is, poorly formed, unstructured or incorrectly coded — health information from EHRs, labs and aggregators, and automatically normalizes, re-organizes, deduplicates and summarizes the data, said a Diameter Health spokesperson in an email. The technology identifies data quality errors early in the ingestion process, which makes data sharing more efficient.
“We are thrilled to be a critical and foundational component to Apervita’s platform by delivering clean, normalized, and enriched multi-source clinical data to their customers, empowering providers, payers and other healthcare stakeholders to improve quality and deliver value,” said Eric Rosow, CEO of Diameter Health, in a news release.
Healthcare data is proliferating as the industry becomes more digitized. Telehealth and remote patient monitoring services, in particular, grew exponentially amid the Covid-19 pandemic. And the data generated by these services also grew.
In addition, wearable health technology, like glucose monitors and the Apple Watch, are becoming more widely used to track patient diagnostics and encourage patient engagement, Howard said. This provides even more data for the healthcare industry to contend with.
“As the volume of healthcare data continues to grow, so will the need to have technology that normalizes the data so that it can be used to support quality measurement, value-based contracts and analytics,” he said.
Photo: Dmitrii_Guzhanin, Getty Images
In a COVID-impacted world where video communication is the new norm, Vpply is connecting job seekers with companies through a unique video-based job application experience that minimises the need for lengthy CVs and cover letters.
Vpply is a video job platform that allows job seekers to record and upload short videos, providing applicants with the chance to showcase character and people skills.
“The application process starts with a simple job search with filters which will take you to a list of job opportunities on Vpply,” CEO and co-founder Tom Lipczynski told Dynamic Business.
“From there, jobseekers can browse and select jobs they wish to apply for and simply record or upload a pre-recorded video introducing themselves and their interest in the job application.
“After reviewing their application, they can add in their career history and ‘Vpply’ (apply with video).”
The company says employers will also benefit from Vpply’s technology by having a shortened recruitment process and more consistent scheduling of interviews.
It starts with a vision
Co-founders Tom Lipczynski, James Farrell and Alex Perry launched Vpply in July 2020 during the height of the COVID-19 pandemic with a mission to decrease the mass unemployment being caused.
Tom, who has prior experience working with search giants Indeed and Adzuna, met Alex at a stockbroking firm in 2014. In 2019, James joined the duo and the three of them bonded over their shared business background and passion for video.
The founders say the technology behind Vpply was spurred by a lack of human connection in job search and a growing demand for video-based technologies and applications such as Zoom and Google Meet.
“The shift to video as an everyday tool is already here accelerated by the global pandemic,” Mr Lipczynski said.
“I see video as an important tool for the future and wanted it as the core of Vpply. I was also looking for a new challenge with an idea that is fresh and exciting.”
The sectors on board
In January 2021, Vpply listed more than 6,000 jobs in industries including hospitality, retail, administration, recruitment, sales and marketing and is currently expanding.
The platform gained over 2,000 unique users in January alone, most of them between 24-34 years old – an age group that Mr Lipczynski says “suffered the most” as a result of the recession.
Even though the overall unemployment rate in Australia dropped down to 6.4 per cent in January this year, it increased to 13.9 per cent for young people at the same time.
“In October, employment among Australian youth 15-24 was 4.4 per cent below its level in March and represents the largest drop of any age group,” Mr Lipczynski said.
“As the unemployment of Australian youth has been the most impacted during COVID-19, Vpply’s platform has been most adapted and used by these age groups, showing a demand for jobs and more innovative ways to apply.”
What about CVs and cover letters?
Mr Lipczynski says job search companies that use mostly traditional application methods “may employ wrong culture fit” due to the restrictive nature of CVs. Vpply’s aim, however, is not to eliminate CVs and cover letters but to have video application as the first step towards recruitment.
“Various jobseekers have worked very hard on their career history and have amazing CVs, so we do not want to take away from showcasing those achievements.
“It is however the same jobseekers that are finding it very hard to get a foot in the door, even to gain experience in unpaid internships, so Vpply is an option to try a different method to get hired.”
The company says it will work with various associations to provide fair solutions and experiences for job seekers and employers, but it is ultimately up to the hiring party to choose an individual based on their CV/video, video interview and/or face to face interview.
An ‘opportunity for innovation‘
For the Vpply team, 2021 is all about research and development. The company says its aim is to improve the jobseeker experience while finding new ways to scale and generate revenue streams – especially in areas like artificial intelligence (AI) and machine learning.
“We are sitting on a unique product in the market with the opportunity for innovation and using various forms of AI,” Mr Lipczynski said.
Vpply currently integrates with Seek-owned JobAdder and is working with partners that will allow automatic postings in Australia and New Zealand.
“AI in video can pick up on so many pieces of information that cannot be gathered from CVs and this will be the new trend in the next few years – from simple cues such as lighting and length of application time,” Mr Lipczynski explained.
“Machine learning can be applied to tone, body language and various other points that Vpply will work with jobseekers to give them a larger chance of success in landing their dream job.”
Tom’s tips for a top video application
Mr Lipczynski says job seekers should be confident and willing to showcase their unique personalities while being mindful of factors such as lighting, audio and talking pace in their video applications.
“Although videos allow for greater creativity and range in applications, it is important for jobseekers to remember that they are part of a formal application process. Therefore, looking presentable and keeping videos at a considerable length – recommended 30 seconds to one minute – are all tips to filming a great application.
“The beauty of Vpply is that we allow retakes. However, the first take is often the best – so best not to overthink!”
Athenex’s lead drug candidate, an oral formulation of the chemotherapy paclitaxel, is intended to bring patients comparable, if not better, efficacy and fewer side effects than the intravenous version. But the company now faces questions about the drug’s safety in the wake of an FDA rejection.
Buffalo, New York-based Athenex announced the rejection of the cancer drug Monday. According to the company, the regulator recommended the biotech conduct a new clinical trial in metastatic breast cancer patients. The agency also suggested the company take steps to mitigate the drug’s toxicity.
Shares of Athenex fell sharply after the FDA rejection was announced, and closed Monday at $5.46 apiece, down nearly 55% from Friday’s closing stock price.
Paclitaxel, also known as Taxol, is a widely used chemotherapy for treating breast, ovarian, and lung cancers. Intravenous dosing of the drug can cause adverse reactions. To mitigate those effects, cancer patients are given steroids and antihistamines prior to dosing of the chemotherapy. Other side effects of intravenous paclitaxel include nerve damage, hair loss, and neutropenia, which is an abnormally low level of a type of white blood cell called neutrophils. Those side effects may reduce how much of a dose of the chemotherapy a patient can receive.
Athenex’s version of paclitaxel is given in combination with another drug, encequidar. According to the company, this compound blocks a protein in the intestinal wall that limits the absorption of chemotherapies. In results of a Phase 3 study testing Athenex’s oral paclitaxel in patients with metastatic breast cancer, the company reported its drug met the main goal of showing statistically significant improvement in the overall response rate compared against treatment with the IV version of the chemotherapy.
The company also reported that its drug can reach levels in the blood comparable to IV paclitaxel, and for a longer period of time. The company said in securities filings that this capability may translate to a better clinical response to the therapy. In the 402-patient Phase 3 study, Athenex observed a higher tumor response rate along with lower incidence and severity of nerve problems compared to IV paclitaxel.
Athenex said that the agency’s complete response letter cited the risk of an increase in problems related to neutropenia in the oral paclitaxel arm compared with the group treated with the IV formulation. The FDA also expressed concern about how the results of the study primary endpoint were evaluated under blinded independent central review, a group of independent physicians. According to Athenex, the FDA said there may have been “unmeasured bias and influence” on the review.
Speaking on a conference call, CEO Johnson Lau said the company was “surprised and extremely disappointed” by the FDA’s rejection. The neutropenia concerns cited are a known risk of paclitaxel, he said. Lau added that the review remained blinded, was conducted by independent radiologists, and the regulator had not issued any formal warnings flagging problems at the imaging lab.
The FDA’s recommendation that Athenex conduct another clinical trial specified that the study should include patients more representative of the U.S. population. Rudolf Kwan, the company’s chief medical officer, said on the call that none of the clinical trial sites were in the U.S. But he added that the company had discussed the clinical trial design with the regulator, and the single study, as proposed by the company, was understood to be sufficient to support approval if the results were positive.
Lau said that the company plans to request a meeting with the FDA to discuss the letter and clarify the scope of the new clinical trial needed to address the agency’s concerns.
“Whether it requires the whole study be done in U.S., we’ll have to clarify in the meeting,” Lau said.
Though Athenex has a pipeline of clinical-stage cancer therapies, company currently generates most of its revenue from the sales of generic injectable products. In 2020, it reported more than $105 million in product sales, a 73% increase over 2019 sales. In its financial report of fourth quarter 2020 and full-year results, Athenex attributed the revenue increase to growing sales of specialty pharmaceutical products used to treat hospitalized Covid-19 patients. As of Dec. 31, 2020, Athenex had $86.1 million in cash and $138.6 million in short-term investments.
Photo by American Cancer Society/Getty Images
The FDA has authorized Johnson & Johnson’s Covid-19 vaccine for emergency use, adding a third vaccination option—one that comes with storage and distribution advantages.
The regulatory decision followed the review of an FDA advisory panel, which voted unanimously on Friday to recommend authorization of the vaccine. J&J said it has begun shipping its vaccines to the federal government, which will manage distribution. The company expects to deliver enough vials for the vaccination of more than 20 million people in the U.S. by the end of March, ramping up to 100 million vaccinations by mid-year.
The J&J shot joins the messenger RNA vaccines developed by Moderna and partners Pfizer and BioNTech as the only authorized Covid vaccines in the U.S. The mRNA vaccines must be transported and stored at ultra-cold temperatures well below temperatures of typical medical freezer equipment. However, vaccination sites now have a little more flexibility in how they can store mRNA vaccines. Last week, the FDA approved a request from Pfizer and BioNTech to permit storage of their vaccine at pharmaceutical-grade freezers for up to two weeks.
The J&J vaccine can be transported and stored at refrigerator temperatures, making it a better option for rural areas or vaccination sites that don’t have the specialized freezer equipment required to store the mRNA vaccines. It has the additional advantage of being a single shot, unlike the mRNA vaccines that are given as two doses weeks apart. A single shot avoids the challenges of getting people to return for a second injection.
“The potential to significantly reduce the burden of severe disease, by providing an effective and well-tolerated vaccine with just one immunization, is a critical component of the global public health response,” Paul Stoffels, J&J’s chief scientific officer, said in a prepared statement. “A one-shot vaccine is considered by the World Health Organization to be the best option in pandemic settings, enhancing access, distribution and compliance.
The J&J vaccine uses a virus to fight a virus. The company’s Janssen subsidiary takes adenovirus, which causes the common cold, and engineers it so that it cannot replicate and does not cause illness. This engineered virus becomes the vehicle that transports into cells a piece of DNA from SARS-CoV-2, the novel coronavirus. Cells use that genetic material to make the spike protein found on the surface of SARS-CoV-2. Those proteins spark the immune response that leads to immunity. This vaccine technology, which J&J calls AdVac, is the basis of the company’s Ebola vaccine, which was approved by the FDA in 2019.
The FDA authorization for J&J’s Covid vaccine was based on results from a global, placebo-controlled Phase 3 study that enrolled nearly 44,000 volunteers. Those participants were followed for a median of eight weeks. The main goal of the study was to evaluate the first occurrence of moderate-to-severe Covid infection with the onset of symptoms after 14 days, and then after the 28-day mark.
Overall, the J&J vaccine was about 67% effective in preventing moderate-to-severe or critical Covid infection after two weeks. After 28 days, the vaccine was about 66% effective at preventing infection. The FDA added that the J&J vaccine was about 77% effective in preventing severe or critical illness two weeks after vaccination. After 28 days, the vaccine was 85% effective in preventing severe or critical illness.
The most common side effects reported from the studies were pain at the injection site, headaches, fatigue, muscle aches, and nausea. The FDA said these side effects were mostly mild to moderate and lasted for a day or two. J&J does not yet have enough data to determine how long protection from the vaccine lasts. The studies conducted to date also do not show whether the vaccine stops people from transmitting the virus. As part of the emergency authorization, J&J must continue to collect data about its vaccine and report and serious adverse events.
The J&J vaccine is given as a 0.5 mL intramuscular injection. The vaccine is shipped in vials, each containing five doses. The company estimates the vaccine will remain stable for two years stored at minus 4 degrees Fahrenheit (minus 20 degrees Celsius). At refrigerator temperatures in the range of 36 to 46 degrees Fahrenheit (2 to 8 degrees Celsius), the company says the vaccine can be stored for up to three months. The company will deliver the vaccine with the same cold chain currently used to ship its other medicines.
The federal government will manage the allocation and distribution of the J&J vaccine according to guidelines set by the Center for Disease Control and Prevention’s Advisory Committee on Immunization Practices. Johnson & Johnson said that it plans file an application seeking a formal FDA approval later this year. The company is also seeking authorizations for its vaccine in other markets.
Photo: Esben_H, Getty Images
The U.S. is one step closer to making available another Covid-19 vaccine after a panel of experts voted unanimously Friday to recommend emergency use authorization for a shot developed by Johnson & Johnson.
The independent panel, comprised of mostly physicians, voted 22-0 to support the vaccine with no one abstaining. These votes aren’t binding on the FDA, but the agency often follows the recommendations of its panels. A decision could come as early as this weekend. The two Covid vaccines currently cleared for emergency use received their authorizations the day after their respective advisory panel meetings.
The Johnson & Johnson vaccine would offer an alternative to the ones currently available from the Pfizer and BioNtech alliance, and Moderna. Those messenger RNA vaccines must be distributed and stored at ultra-cold temperatures, then thawed before use. Those shots are given as two doses, weeks apart. The J&J vaccine can be kept at refrigerator temperatures. Another key difference is that the J&J jab requires a single shot. Together, those features will make the J&J vaccine easier to distribute to more people in more places through distribution channels that are already in place.
Panel members expressed support for the J&J vaccine, saying that the safety and efficacy data supported its authorization. But panelists also cautioned the public against picking vaccine favorites.
“It’s important that people do not think one vaccine is better than another,” said Cody Meissner, an infectious disease expert and professor of pediatrics at the Tufts University School of Medicine. “There is no preference for one vaccine over another and all vaccines work with what appears to be equal safety and equal efficacy as of this time.”
Emergency authorization is not the same as an approval. Federal law permits the FDA to allow marketing of unapproved medical products for emergency situations, such as a pandemic. Authorizations only last for the duration of the emergency. These authorizations can also be revoked if new data show that the product is not safe or effective. Stanley Perlman, a professor in the departments of microbiology and immunology at the University of Iowa, said that while the clinical studies to date have produced data about the vaccine’s safety and efficacy, it would be “nice to have more.”
The J&J vaccine may be new, but compared to the mRNA vaccines, the technology behind it has bit of a longer track record. J&J vaccine makes it using its AdVac technology, the same platform that produced the company’s Ebola vaccine, which the FDA approved in 2019. The technology takes the virus that causes the common cold and modifies it so it doesn’t cause illness. That engineered virus is the delivery vehicle that ferries into cells a snippet of genetic code for the novel coronavirus’s spike protein. The genetic material serves as the blueprint from which the body’s cells produce spike proteins. The immune system responds by producing antibodies to those proteins, conferring immunity.
The clinical data to date for J&J Covid vaccine covers 44,000 adults from all over the world. In Phase 3 data reported in late January, the vaccine was 66% effective overall in preventing moderate-to-severe infection, 28 days after vaccination. Furthermore, the vaccine showed 85% efficacy in preventing severe disease, and showed complete protection against Covid-related hospitalization and death, also measured at day 28.
Those marks look inferior to the greater than 90% efficacy demonstrated in mRNA vaccine trials. But cross-trial comparisons are difficult and can be misleading because trials have different designs and different goals. Also, the mRNA studies were conducted earlier in the year when there were fewer variants circulating. Public health experts have said that if those vaccines were tested under current conditions, their efficacy rates might be lower, too.
Plans are already underway to gather more data about J&J’s shot, including a study of the vaccine in children and teens. Johan Van Hoof, the global head of the infectious diseases and vaccines for J&J’s Janssen subsidiary, told the advisory panel that a clinical trial testing the vaccine in those 17 and younger is expected to begin this spring. He also said that the company is assessing how the vaccine responds to variants of the novel coronavirus.
Shortly after Friday’s meeting, the FDA issued a statement saying that it would “rapidly work” with J&J toward finalization and issuance of an emergency use authorization. The agency added that it has notified federal partners involved in the allocation and distribution of vaccines, so that they are ready.
Photo: Getty Images, Sezeryadigar
On the heels of a coordinated care agreement with Anthem, St. Louis-based Mercy is partnering with another health insurer.
Per the new agreement, Humana’s Medicare Advantage members who are patients at Mercy facilities and physician practices will gain in-network access to Mercy Virtual. Staffed with more than 300 clinicians, Mercy Virtual offers 24/7 telehealth services, including virtual primary care at home.
In addition, the agreement links provider reimbursement to quality of care, shifting the payment model for Mercy physicians from fee-for-service to value-based compensation.
“Mercy is committed to working with our communities to improve healthcare while also reducing the total cost of care,” said Shannon Sock, Mercy’s executive vice president, chief strategist and CFO, in a news release. “Strong payer relationships, like this one with Humana, will help in our long-term journey to provide more seamless care for our patients. Together we can make a real difference for patients, which is especially critical during this pandemic.”
The new agreement brings together an insurer with a sizeable membership and a vast healthcare organization.
Mercy includes more than 40 acute care, managed and specialty hospitals, urgent care locations, imaging centers and pharmacies, as well as 4,000 primary and specialty care clinicians in Arkansas, Kansas, Missouri and Oklahoma. And, as of January, Humana’s Medicare Advantage membership totaled more than 4.8 million.
“This agreement unites two organizations striving to offer care that is more accessible, personalized and coordinated — a commitment that is more important than ever right now,” said Jeremy Gaskill, Humana regional Medicare president, in a news release.
The news of the partnership between Humana and Mercy comes just a few weeks after the health system entered into a cooperative care agreement with Anthem. That partnership includes a closer alignment between clinical care and reimbursement as well as increased data flow between Mercy and Anthem.
As the healthcare industry moves toward value-based care, provider-payer partnerships that aim to improve care quality have become more popular.
For example, at the end of last year, Salt Lake City-based Intermountain Healthcare and UnitedHealthcare established an accountable care organization with the goal of improving care coordination and health outcomes for the payer’s Medicare Advantage members. In another instance, Butler Hospital, a mental health facility, partnered with Blue Cross & Blue Shield of Rhode Island to reduce hospital readmissions.
“If either a payer or provider is looking to fill a gap and expand optionality of services for partners or members, these types of innovative partnerships are beneficial because they provide both parties an opportunity to quickly refine and build versus recreating the wheel,” said Nick Donkar, PricewaterhouseCoopers’ health services deals leader. “This strategy enables a win-win solution in short order.”
Provider-payer partnerships will likely continue into the future to help both entities fill gaps as they think about improving care in a virtual environment, he said.
Photo: Gerasimov174, Getty Images
The hospitality industry continues to struggle as pandemic-mandated restrictions on travel and assembly hurt the bottom line and livelihoods of both businesses and workers alike.
International travel to Canada is down by more than 90 per cent and while some travellers are still trickling in, the Canadian government requires them to quarantine at designated hotels for about three days at a potential cost of up to $2,000.
The enforced quarantining might help a small number of hotels near the airports in select cities, but it will not provide any relief for most of the 8,000 hotels of varying sizes and quality across Canada.
Room occupancy rates dropped precipitously to 33.7 per cent in 2020, from 66.5 per cent in 2019, and the decline forced the hotel industry to lower room rates. The average daily rate in Canada, which had been steadily rising since 2010, declined to $124 in 2020, from $162 in 2019. The revenue per available room correspondingly declined to $43 in 2020, from $109 a year earlier.
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A look at recent travel trends helps explain why the hotel industry’s key performance indicators have collapsed by so much, because nowhere has the impact of COVID-19 been more evident than in the international tourism and travel sector.
The number of travellers from the United States and overseas in December 2020 was down by 93 per cent compared to December 2019, according to Statistics Canada data released earlier in February. Even the number of Canadian residents returning from abroad was down by 91.3 per cent during the same period.
A year-over-year comparison reveals that the number of international trips to and from Canada dropped to 25.9 million, an annual decline of 73 per cent. Excluding Canadian residents, only 5.1 million travellers arrived in 2020, a decline of more than 84 per cent from 2019. The number of Canadian residents returning from abroad was down by 74 per cent to 14.6 million.
Returning residents and new immigrants impact housing markets more than hotels, while business travellers and tourists generate the demand in the hospitality sector. A sizable segment of the demand for overnight hotel stays, restaurant meals, and art gallery, aquarium, museum and zoo visits is generated by international and domestic tourists whose numbers have considerably declined.
Even trips by U.S. residents to Canada in December 2020 were down by 93.3 per cent from the year before. Not all U.S.-based trips are overnight trips, of course, but those visitors still enjoy meals at restaurants and buy goods at stores.
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The declines are a far cry from the glowing forecasts that greeted the hotel industry as recently as 2019. “Our hotels are full, and we are in good shape to continue to grow top and bottom lines in 2019,” said an annual review of Canadian hotel industry by CBRE Group Inc., a commercial real estate services and investment firm.
CBRE further noted that “the only factors that cause significant shifts in the hotel market are either geopolitical events — such as 9/11 and the global financial crisis — or the delivery of new hotel supply.”
With the benefit of hindsight, we can add pandemics to the list of factors that can drastically affect the hotel industry’s bottom line.
The long-term forecasts for the hotel industry do not solely depend on lifting international and domestic travel restrictions. For one thing, web-conferencing technologies have displaced some demand for intercity and international travel. Virtual meetings, conferences and even birthdays and weddings emerged in response to the restrictions that prevented face-to-face meetings.
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Traditionally large gatherings for birthdays and weddings are likely to return once the pandemic is over. However, one could expect a relative decline in business travel, given that businesses are now armed with cost-cutting tech-enabled tools.
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The resulting effect could be more pronounced in downtown employment hubs in large urban centres, where near-empty office towers could struggle to attract employees who have proven to be equally productive working from home. With employees teleworking, what’s the point of flying to a different city to visit business associates?
The hotel industry is likely to do better in 2021 and beyond than it did in 2020. Still, the industry should be prepared for a future of sustained lower demand. This might require some hotels to change their offerings, such as providing longer-term stays, and being part of the solution for challenges such as housing affordability that many cities continue to face.
Murtaza Haider is a professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at the Haider-Moranis Bulletin website hmbulletin.com.