Quarterly Industry Watch
Every day, Orissa Software’s remote camp management tools transact, process, and report on hundreds of thousands of accommodation, food service, and guest management activities, from meals scans to reservations to room status changes, and more.
This volume of data, along with our 15-year operating history and more installations in North American energy exploration zones than all other solutions combined, gives us unparalleled insight into the remote workforce housing industry.
Each quarter, we assemble and analyze this data, creating a resource of comparative metrics and observations that is unique in the workforce accommodation industry.
About The Data
92 calendar days in CampWare™
Average Camp Capacity:
Over 1,000 beds
October 1, 2016 to December 31, 2016
Alberta Oilsands, U.S. Fracturing, Western Canada, Other U.S.A.
In our view, the most notable trend of Q4 and in fact all of 2016 was in the step change in rooms taken off-market. For the first time in our 15-year history in the workforce housing industry, we observed a decommissioning of assets not isolated to any specific region, operator, or camp size. The impact is compounded by the fact that we believe the decommissionings to be permanent; our information indicates some of these assets have been decommissioned or sold and are not in a position to be brought back to service.
Q4 did offer some optimism, however, in stronger U.S. Fracturing occupancy, increased year-over-year reservation activity, and a higher margin mix of booking types. For operators with good cost control discipline and the ability to deploy adequate resources in an environment of very short-term guest notice, 2017 should be a year of improving cash flows.
Relative to Q3 2016, all regions showed increases in the occupancy rate with the exception of the Alberta Oilsands. Notable in that the Alberta region has maintained close to 50% occupancy for the two year period prior, its drop also contributed significantly to the year-over-year decline from 45% to 33%. Equally notable is the U.S. Fracturing region showing occupancy above the 25% mark for the first time since Q2 2015, possibly a consequence of the growth in rig count in the region since the summer of 2016.
Since Q2 2016 we have observed and forecast a convergence around the eight to nine day average stay length across all regions, with Western Canada being the exception. Q4 2016 closely held to that observation and as before, we attribute the Western Canadian exception to the operational embedding of longer, fixed shift rotations in a single, large regional project.
Last quarter, we forecasted a close to the year at 60,000 reservations for the final quarter – a forecast that overstated the actual number by almost 30%. Weaker than expected activity in the Alberta Oilsands region evident in this quarter’s occupancy numbers contributed to the decline, to a magnitude unanticipated in Q3. Year-over-year, however, the overall reservations number showed positive growth of 11%. This growth was driven by strength in the first three quarters of 2016 in the Alberta and Western Canadian regions, and by operators increasingly requiring room reservations and discouraging walk-up arrivals, so resource needs can be better forecast.
Executive room bookings increased another 35% quarter over quarter and over 250% year-over-year, the additional gross margins helping offset the weaker reservation activity at the end of the year. The proportionate shift towards Jack & Jill room bookings both year-over-year and quarter-over-quarter would have equally helped gross margins. As in prior quarters, we believe the current booking distribution points to a higher deployment of facility operations staff versus general and construction labour.
While the proportion of bookings made within seven days remained virtually the same year-over-year at 32-33%, there was a clear shift in timing. This quarter, almost ¼ of all bookings were made within two days of arrival – more than double the proportion in Q4 2015. This was unexpected as we believed operators would continue to enforce advance notice requirements, but with increased vacancies, the requirement may have been relaxed for competitive reasons and behavioural expectations. Perhaps the “new normal” in booking activity, camp operators who can adapt to the shorter time frames will better preserve cashflow.
Continuing the trend observed in Q3 2016, this quarter set a new low in short-term cancellations at 2.23%, relative to 2.62% last quarter and 3.1% last year.
Somewhat offsetting the positive impact of lower cancellation rates, however, was a significant uptick in no-shows. Up from 3.1% last quarter, the level observed in Q4 was higher than any other in the last two years – a significant departure from the overall downward trend in this metric throughout 2016.
Overall we suspect this increase in no-shows amplified procurement and resource scheduling challenges more than the benefit of fewer short-term cancellations.
This quarter saw a significant “correction” in the service standard in the U.S. Fracturing region from Q3, falling from over 40 hours to 23.5. We suspected in Q3 that rooms in the region were being excluded from scheduled cleaning pending being put into Off-Market status; the rapid reversion to less than a day uncleaned seems to support that notion. The other notable change occurred in the Western Canada, with a more than 400% increase year-over-year and a 60% increase over Q3.
At 54,000 rooms off-market this quarter, up more 55% from 35,000 last quarter and more than double year-over year, the active removal, sale, or decommissioning of assets trended strongly upwards throughout 2016. In Q3 we observed the driving factor as being smaller operations, but saw decommissioning or closures in this quarter among large and small operations alike.