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 are unique in the workforce accommodation industry.
About The Data
91 calendar days in CampWare™
Average Camp Capacity:
Over 1,000 beds
January 1, 2017 to March 31, 2017
Alberta Oilsands, U.S. Fracturing, Western Canada, Other U.S.A.
In an environment where we increasingly observe consolidations, acquisitions, and changes in asset ownership, we don’t expect to see any substantial thinning of camp assets as a means of reducing costs. With the strongest assets being strategically located close to active production sites, consolidation across geographies under a single operator will not typically yield significant cost and/or revenue synergies in short order. What we will likely see is an imposition of tighter reservations policies and operational best practices on newly acquired properties to more quickly improve margins.
Overall, this quarter saw another step down in camp activity, and this is not reflective of reduced seasonal drilling activity, necessarily. It appears that there has been another correction in asset inventory as demand (as measured by new hires, reservations) fell markedly.
Year-over-year, Q1 2017 occupancy was stronger on average across all regions, with a sample-wide average of 30.2% in 2016 vs 39.9% this year. It should be noted, however, that Q1 2016 also proved to be the occupancy low points for all four areas. Quarter-over-quarter, with reports of significantly reduced numbers of new hires coming from most regions, it is unsurprising that occupancy was flat or down in all but Western Canada.
Western Canada continued its expansion in its average stay length to over two full weeks, having increased steadily from the sample-wide average of eight to nine days in Q2 last year. We continue to attribute that steady increase to fixed shift rotations in a large regional project. The Other U.S.A. region also showed a marked quarter-over-quarter uptick from 9 to 11 days, although still a significant margin below its average stay from last year.
Reservation activity was lower in Q1 2017 than in any other period observed since the first quarter of 2015 – when WTI prices first weakened below the $50 and into the $40 levels. We attribute this markedly weaker performance to – in part at least – the previously mentioned reduction in new hires that is itself symptomatic perhaps of another downward step change in overall labor demand. It is worth mentioning in this context that in the U.S. Fracturing and Other U.S.A. regions, reservations are not widely practiced as bookings are generally contracted in advance.
Within the weaker reservation activity was significant strength in Executive class bookings. Historically under 20% of total reservations, Executive bookings in Q1 2017 increased to nearly half, at the expense of Standard room reservations. This likely reflects the previously observed deployment of more operational staff relative to construction resources and more predictable shift scheduling and reservations.
In Q1 2017, for the first time since we began sampling camp data two years ago, the majority of guest bookings (51%) were made within a week of arrival. As noted in Q4 2016, the historical proportion of short notice reservations has remained in the 32-33% range, with the overall shift above 50% in this quarter driven primarily by bookings made within two days of arrival. This could have material operational and procurement cost/planning impacts (albeit on overall lower reservation volume), perhaps offset somewhat by the additional margin derived from increased Executive class bookings.
Largely unchanged from last quarter at 2.3% overall, cancellations were almost half of the 4.53% observed at this time last year. The continued decline in short-term cancellations over 2016 and into this year hints at operators’ increased enforcement of cancellation penalties, or more planned and predictable accommodation needs amongst the contractors. The decline would also be a result of fewer “placeholder” reservations, formerly driven by the limited accommodation environment prior to the collapse of WTI prices.
Dropping from 5.39% at the end of 2016, the Q1 2017 no-show number at 3.23% was much closer to the values observed throughout last year. Combined, we can perhaps say that while more than half of guests are booking on short notice, an increasingly predictable ratio of them will arrive as scheduled.
Quarter-over-quarter and year-over-year, service standards improved across the sample with the exception of the U.S. Fracturing region. At over three days it represents the highest level observed in our dataset historically, and is likely a fallout of the compression in occupancies and a lesser need to ‘flip’ rooms to vacant in short order.
25% more rooms came off-market from the end of 2016 into this quarter, which at over 68,000 sets a new historical high for this metric. What began in 2015 with asset decommissionings now includes a string of full camp closures, resulting in significant step changes in the number of rooms removed from booking eligibility.