Newfoundland and Labrador Product Development Strategy

- 164 -The earlier discussion of this question with respect to ‘demand generating’ accommodationsdevelopment, and with ‘demand influencing’ projects is important in this regard. Projects thatmeet a high standard of demand generating/influencing should merit more emphasis on thestrategic and economic benefit side of the question and less on the competitive impact side.The matter was also addressed earlier in the question of the third type of development beingrecommended for support, that of ‘filling gaps’ in supply. In essence, if a project fullyqualifies as ‘filling a gap’, then the competitive impact question is essentially resolved, atleast within that type of accommodation, and it is at least diminished in import overall. If itonly qualifies to a modest degree in this regard, then the impact question should be givenmuch more weight.In summary, the key issues that would cause strategic and economic benefit to weight moreheavily than competitive impact are:o If the proposed project represents the introduction of a new type of accommodationproperty for the area that will, on balance, have a considerable impact in growingtourism to the region and/or the area.o If there is an absence or evident shortage of the kind of accommodations sought bytourists (and/or specific market segments), particularly in areas that have large marketsnearby or passing by, in terms of:- Types of accommodation- Character and appeal- Star grade and qualityo If occupancy rates of other similar properties in the area are high, suggesting anundersupply, with low occupancies suggesting an oversupply. (However, lowoccupancy can also indicate an undersupply in some cases, because, while an area mayhave appeal and markets available near at hand, it lacks enough accommodations, orquality accommodations, to qualify the area as an overnight destination. In the formercase low occupancies is a concern; in the latter it shouldn’t be.)Assessment of occupancy rates should be considered within the type category andquality standard in question for a particular project, but also to a lesser degree fordifferent types of properties and star grade levels to get a fuller picture of potentialgaps on an overall basis for the area. (Note that occupancy reporting rates in theprovince vary widely by region, type, and star grade, and should be reviewed in thiscontext. It is also widely believed that many operators under-report their real rates inorder to give the impression that there are too many rooms in the area and/or to avoidpossible prosecution for tax evasion, either income taxes or liability for HST remittal.As a consequence, this type of information has to be viewed with suspicion and notunduly relied upon.)In cases of a perceived shortage of accommodations for any of the causes in the last two itemsabove, there also needs to be a sound business case presented that any such gaps areTHE ECONOMIC PLANNING GROUP of Canada Newfoundland & Labrador Tourism Product DevelopmentD. W. Knight Associates Strategy and Accommodation Needs Study