(Banff's Rimrock Resort Hotel sold to Oxford Property Group in June for $170 million, or $515,200 a room -- Western Canada's biggest hotel transaction of the year.)
Record-high rates and revenue are attracting investor interest in Western Canada’s hotels.
The region saw $431 million worth of assets trade in the first half of 2023, or 41% of the national total, according to Colliers' second-quarter review of the hotel sector.
The second quarter some exceptional pricing for properties including the Rimrock Resort Hotel in Banff for $170 million, $515,200 a room, a price that reflected Oxford Property Group’s plans for a $100 million renovation.
Aldesta Hotel Group picked up Fairmont Hot Springs Resort in BC for $40 million, or $264,900 a room, in June. The deal included three golf courses, a 14-run ski hill, RV park, and more than 650 acres of excess lands.
The two properties ranked second and third after The Hazelton, a Toronto property that commanded an outlier price of $110 million or $1,428,000 a room thanks to the inclusion of 11,250 square feet of retail space, an underground parkade and a 50 per cent interest in the on-site restaurant.
Colliers cited strong growth in average daily rates, the resurgence of domestic travel and small to mid-size group activity as contributing the return of investor interest.
“Hoteliers are reaping substantial top-line gains driven by remarkable increases in average daily rates,” Colliers reported.
Canada’s hotel industry reported its highest average daily rate (ADR) and revenue per available room (RevPAR) on record, according June data from CoStar Group.
ADR soared 12 per cent to $221.86 a room while RevPAR increased 16.1 per cent to $164.97.
The increases came as average national occupancy rates rose 3.6 per cent versus last year to 74.4 per cent – the highest level since last August. With the increase coming ahead of the peak summer travel season, the prospects are good for new records being set in the third quarter.
“Canada’s hotel industry is benefitting from elevated spending on discretionary services,” said Laura Baxter director of hospitality analytics for Canada with CoStar.
Occupancies were highest at limited-service hotels, pointing to a trading down in activity, but group activity was up versus a year ago as this segment of demand continued its recovery from pandemic-era lows.
According to Colliers, full-service hotels accounted for 60 per cent of investor activity in the first half of the year. Limited-service-properties ranked second, at 26 per cent of transaction value.
But when the data was smoothed to account for the large number of high-value transactions, average sale price per room showed that investors were still willing to spend on limited-service properties as well as full-service hotels with equal enthusiasm.
The normalized price per room for all transactions in the first half of the year was $192,100, up 32 per cent from a year ago.