$570M in hotel transactions in first half of 2014: Colliers

Fairmont Empress Hotel, Victoria, BC

Fairmont Empress Hotel, Victoria, BC

TORONTO—In the first half of 2014, there were 64 hotel transactions reported across Canada, compared to 56 trades in the same period in 2013, with transaction volume totalling about $570 million, according to the mid-year industry transaction report issued by Colliers International Hotels.

While transaction volume totalling approximately $570 million is below the pace of $840 million recorded mid-year 2013, there are, noted the report, a number of significant offerings which were brought to market throughout the first half of this year, many of which should materialize into substantial trades in the back end of 2014 and into 2015.

“Overall, we continue to see increased momentum in the market as there is a broad appetite for hotels across all segments by a variety of capital sources,” noted the report. “Investors are looking at the hotel sector with a sense of optimism and quality offerings are being met with a competitive landscape of both private and public sources.”

Highlights of investment activity for the first half of 2014 include:

• 19 transactions over the $10 million threshold year to date (YTD) 2014, amounting to about $397 million or 69 per cent of total first-half volume.

• Top transactions included historic properties such as the 477-room Fairmont Empress Hotel, in Victoria, BC, which sold to Bosa Developments in June (sales details confidential) and the 224-room Radisson Plaza Hotel Saskatchewan, in Regina, SK, which sold to Temple Hotels Inc. in April for $32.8 million ($146,000 per room).

• YTD transaction volume was weighted more heavily in Western Canada, comprising 60 per cent of volume, with an average price per room of $107,400. Western Canada’s volume was largely driven by substantial trades in British Columbia, which alone accounted for 29 per cent of total volume.

• Trades in Eastern Canada reached approximately $231 million, with an average price per room of $42,200, led primarily by Quebec and Ontario. The lower price per-room metrics in Eastern Canada are largely a reflection of the product that came to market, namely smaller limited-service assets in secondary and tertiary markets.