Vacation rental firm grows as Chinese tourism slows

Richmond-based company moves into local hotel sector

Cozystay Holdings Inc. will manage Richmond’s Abercorn Inn hotel in a 15-year lease deal | Photo: Chung Chow

Friction between Ottawa and Beijing has lowered the enthusiasm of Chinese tourists for visiting Canada and Metro Vancouver, statistics suggest.

But while Chinese visitor numbers to Canada show a slowdown or mild declines in some regions, one B.C.-based vacation rental network with deep links to mainland Chinese consumers is pushing ahead with an expansion into the local hotel and resorts market. The plan is to capture a wider range of clients by offering more diverse accommodations.

Richmond-based Cozystay Holdings Inc. said it is taking over the management of the city’s Abercorn Inn hotel from its owners in a 15-year lease deal, culminating in the company renaming the property to include its new Cozystay Signature brand.

The hotel’s owners, who also own the Lake Okanagan Resort in Kelowna, which Cozystay took over in May in another 15-year lease, have another five properties in B.C., including Painter’s Lodge in Campbell River and April Point Resort & Spa on Quadra Island.

Cozystay CEO Galen Cheng said the two parties are in discussion to bring those properties under the Cozystay Signature umbrella possibly as soon as next year.

“Different customers have different expectations,” Cheng said. “For business travellers, a lot of them want to stay in hotels. For families or individuals, you see more going towards vacation rentals. So we want to fit all requirements. We think that in the next five to 10 years there will be a convergence of hotels and vacation rentals.”

Macdonald Commercial Real Estate Services Ltd. said in 2013 that the Abercorn Inn – previously a Best Western Plus – was bought by its current owner that year. The Victoria Times Colonist, meanwhile, reported that the owner, registered under limited companies named after the resorts in the acquisition with an office address in Richmond and a director named Liu Xiao Dong, bought April Point and Painter’s Lodge from the Oak Bay Marine Group in 2017.

Cozystay’s report of increasing business comes as Statistics Canada and Tourism Vancouver each reported either slowing growth or mild dips in visitor counts from China so far in 2019. The statistics come after observers predicted fallout from the fractious relationship between the two countries since the arrest of Huawei Technologies Co. Ltd. CFO Meng Wanzhou in Vancouver last December.

Canada and China have announced travel advisories for their citizens to each other’s territories, and B.C. tourism officials have said they are following the situation closely.

Data from Tourism Vancouver via Statistics Canada for the first five months of this year showed visitors from mainland China (Metro Vancouver’s second-largest source of international visitors, behind the United States) reached 97,925, up 3.6% from the same period in 2018. That growth rate is slower than the 6.4% growth recorded for Chinese visits to Metro Vancouver from 2017 to 2018.

There were only two other Asia-Pacific markets during the first five months of 2019 from which the number of visitors to Canada fell (New Zealand, down 19% to 12,620, and Hong Kong, down 12% to 30,527). Other top Asia-Pacific countries, however, all posted significantly higher growth. The number of visitors from Australia rose by 9% to 74,510; from Japan, by 14% to 42,597; and from India, by a whopping 43% to 35,605.

Nationally, in its August 21 report on international tourist numbers in Canada, Statistics Canada noted a 4.9% decline of visitors from Asia to the entire country in June – but the biggest contributor was a 10.4% slide in the number of overnight tourists from Japan.

“Travel from China, the second-largest source market of overseas travellers after the United Kingdom, declined 2.2% in June,” the report added. “The number of air arrivals from China over the first half of the year was 5.8% lower compared with the same period in 2018, the Canada-China Year of Tourism.”

But while overall visitor numbers may be trending down from the Chinese market, Cheng said most of the slowing came from traditional tour-group subsectors. Meanwhile, an increasing number of Chinese tourists are going the self-guided route, which boosted B.C. bookings from Chinese customers with vacation rental outfits like Cozystay as much as fivefold this summer.

“Abercorn Inn’s current business is 70% from travel agencies and groups,” Cheng said. “But our focus on online can change the customer demographic to increase revenue.… A lot of Chinese travellers speak very good English now. They rent cars from the airport to drive themselves around. They travel like a local … and stay on average for five nights so they can get that experience.”

Cheng added that Cozystay will start bringing some of its mainstays, such as an online booking platform and self-serve and customer service apps, to lower the labour costs at properties such as Abercorn Inn. But he also reiterated that manned front desks will not be completely eliminated. Instead, they will be “complemented” with self-serve check-in/check-out kiosks that Cozystay will implement. The company is negotiating with one Californian company and another from China to create these kiosks.

“We’ve found the younger generation of travellers will come more often [after the new tech is installed], because they like similar technologies in other markets,” Cheng said, adding that Cozystay’s goal is to add enough properties to its system to begin the acquisition of guest data. That information can then be studied to allow the company to tailor services to specific clients.

“That will take five to 10 years,” Cheng said. “That’s one of the reasons we are expanding.… We need a lot of data for it to be useful. That’s our long-term deal; it’s why we also describe ourselves as a tech company and not one that’s only involved in the hospitality sector.”

As for the tourism trends from China, Cheng noted he isn’t concerned. He said that the number of Chinese tourists to Canada reached only about 757,200 in 2018, compared with as many as 1.3 million during the same period for a similar market like Australia – another market with a large overseas Chinese and international student population.

“In the long term, I still think more Chinese travellers will come to Canada,” Cheng said. “They have relatives and friends, and they will visit. Then they will want to see the great cities like Toronto, Montreal and Vancouver. The existing Chinese population in Canada is huge, and they all have their own personal connections, from parents and grandparents to distant relatives and close friends. That’s a very big number.”