The Conference Board's accommodation industry outlook predicted modest profits of $236 million for Canadian hoteliers in 2007.
"Although sales are strong, thanks to a steady increase in domestic travel, tight labout markets are pushing wage costs higher and profit margins will remain slim this year," said Conference Board director Louis Theriault.
Average weekly earnings for workers in the hotel industry in 2006 grew faster than the all-industry average, forcing hoteliers to raise prices above the rate of inflation this year.
The declining number of U.S. visitors is also a concern for the sector, as the new passport rules for air travellers are expected to hamper foreign spending in 2007.
"A significant recovery in foreign visitors is not expected until after 2008, once travellers have adjusted to the full implementation of the Western Hemisphere Travel Initiative," the report stated.
