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 the Conference Board’s Canadian Industrial Outlook: Canada’s Accommodation Industry – Summer 2007.

“After three years of improvement, accommodation profits are expected to rise slightly to $982 million in 2007,” said Michael Burt, senior economist, in a release. “However, with labour shortages and the resulting increases in wage costs limiting profits, the industry can expected weaker profits next year.”

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 due to the surging Canadian dollar and the ongoing implementation of the Western Hemisphere Travel Initiative (WHTI).

However longer term, strong growth in domestic travel spending will continue to support the industry. Once the WHTI is fully implemented, foreign spending will also start to recover. Finally, the Vancouver Olympics in 2010 are expected to provide a boost to the industry’s performance.

Due to a revision in Statistics Canada data, historical and forecast profit levels for the industry have been revised upward since the previous Accommodation industry outlook, the Conference Board said.