Hotelier April 2024 Digital Issue

THE INVESTMENT QUOTIENT

For the past few years, the hotel industry has enjoyed strong market fundamentals driven by solid ADR and occupancy rates, creating a positive investment environment. And while the pandemic certainly decimated the industry in 2020, as soon as consumers got the go ahead to travel once again, the rebound was quick and dramatic.

But while the investment outlook in recent years has been favourable, there are some areas that have taken a bit longer to recover. For example, according to the 2023/24 Canadian Lodging Overview , produced by Cushman & Wakefield, there’s been a slowdown in new hotel openings over the last three years. But the report does note that, “With strong market results, improvements in supply-chain issues, and moderation of costs, new and postponed projects are now beginning to move forward.”

Additionally, “New hotel room openings in Canada declined from 4,349 in 2021 to 3,319 in 2022 and 3,237 in 2023,” representing annual supply growth of one per cent, 0.7 per cent and 0.7 per cent respectively.”

The report cites estimates from STR that show 4,173 new rooms will open in 2024 (0.9 per cent growth). “The number of rooms in construction trended downward from mid-2021 to mid-2023. However, activity increased in the second half of 2023. Meanwhile, the number of rooms in planning steadily increased from 22,548 in Q1 2021 to 29,309 in Q3 2023. Rooms in planning has surged to 36,497 in Q4 2023 — well above pre-pandemic levels.”

Based on the report, as of December 2023, 57 per cent of the national pipeline rooms were in Ontario, with British Columbia a distant second at 21 per cent. At the market level, Toronto accounted for 18 per cent of the national pipeline rooms, followed by Ontario Central at 13 per cent and Vancouver at 11 per cent. By chain scale, upper midscale and upscale accounted for three per cent and 19 per cent of rooms in the national pipeline, respectively. The current national pipeline (in construction and in planning) represents nearly 10 per cent of Canada’s existing hotel-room supply.

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On the transactions front, the report shows that in 2023, Cushman & Wakefield tracked more than 125 transactions, which accounted for an estimated $1.6B in total sales volume, compared to more than 160 transactions at similar total volume in 2022. The sale of several larger, prime assets located in urban and resort markets, such as the Rimrock Resort in Banff, Alta. (330-room, $170M), the Hazelton in Toronto, (77-room, $110M), the Marriott in Ottawa, (489-room, $86.5M) and the InterContinental in Montreal, (357-room, $80M) led to a new record for average price-per-room transacted, reaching $180,000 per room in 2023.

Interestingly, transactions for ongoing hotel uses accounted for 88 per cent of the total activity in 2023. Sales of hotels being sold for alternate uses, which was notable in 2022, has slowed to about eight per cent of overall volume in 2023. Distress sales continue to be a relatively small part of the overall sales activity. ◆

ROSANNA CAIRA Editor & Publisher

AMY BOSTOCK Managing Editor

NICOLE DI TOMASSO Associate Editor

COURTNEY JENKINS

Art Director

JENNIFER O'NEILL Production Manager

TYLER BECKSTEAD Web Manager

JIM SZABO Digital Marketing Manager

JANINE MARAL Social Media Manager

WENDY GILCHRIST

Director of Business Development

DANNA SMITH Account Manager

ZACK RUSSELL Sales & Marketing Assistant

DANIELA PRICOIU Senior Accountant

ADVISORY BOARD

Andrew Weir, Destination Toronto; Anne Larcade, Sequel Hotels & Resorts; Bonnie Strome, Hyatt Hotels; Christiane Germain, Germain Hotels; Gopal Rao, Conestoga College; Hani Roustom, Friday Harbour Resort; Laura Baxter, Co-Star Reetu Gupta, Easton's Hotels; Ryan Killeen, The Annex Hotel Ryan Murray, The Pillar + Post Hotel; Stephen Renard, Renard International Hospitality & Search Consultants

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Green Key Global provides important thirdparty validation for hotels’ sustainability efforts, and it gives sustainabilityminded travellers the information they need to choose the lodging options that are right for them. AHLA and HAC will be working together to promote these goals through this important partnership

CHECKING IN PARTNERS IN GREEN

AHLA, HAC expand hotel sustainability certification

The American Hotel & Lodging Association (AHLA) and the Hotel Association of Canada (HAC) have joined forces to operate the Green Key Global sustainability certification program in the U.S. and Canada, effective April 1.

HAC created Green Key Global in 1994 to certify hotels’ environmental sustainability policies and processes, and its certification criteria are aligned with all 17 of the United Nations Sustainable Development Goals. The initiative, which provides certifications to hotels around the world, puts hotels through an assessment and audit to measure their performance in areas such as energy and water conservation, land use, hazardous and solid-waste management, air quality, and more.

The AHLA-HAC partnership is crucial for the industry, as sustainability is increasingly shaping the behaviour of leisure, business, and group travellers. Green Key Global programing is designed to give credibility to the sustainability initiatives properties are already undertaking, while equipping them with a plan for continued improvement.

The partnership builds on AHLA’s Responsible Stay initiative, which underscores AHLA member companies’ long-standing and growing commitment to energy efficiency, water conservation, waste reduction, and responsible sourcing.

“This partnership is a game changer for the hotel industry in the U.S. and Canada and takes our commitment to sustainability to the next level,” says Chip Rogers, former president & CEO, AHLA. “Green Key Global provides important third-party validation for hotels’ sustainability efforts, and it gives sustainability-minded travellers the information they need to choose the lodging options that are right for them. AHLA and HAC will be working together to promote these goals through this important partnership.”

“We’re so proud of the commitments hotels are making on the ground as part of this program,” says Susie Grynol, president & CEO, HAC. “Establishing a Green Key Global North American standard of sustainability allows more properties to elevate their leadership in this space, and through this partnership, we believe we can make sustainability accessible for all hotels.” ◆

A NEW CHAPTER

Evergreen Hospitality Group has partnered with Floyd’s to bring Floyd’s Diner to The Vic, Ascend Hotel Collection in Victoria, B.C.

The Vic, which underwent a comprehensive renovation and re-opened in early 2023, epitomizes a new standard of hospitality in the area, boasting impeccable service, stylish decor and luxurious amenities, such as premium bedding and rainfall showers in every guestroom.

Established in 2004, Floyd’s Diner nestled within The Vic marks the brand’s fifth location.

“We couldn’t be more excited to expand Floyd’s Diner to The Vic,” says Petr, owner and operator of Floyd’s. “This partnership marks an exciting chapter for us, and we’re eager to continue delivering our signature blend of delicious cuisine and welcoming atmosphere to more hungry guests.”

A SNEAK PEEK

The Westin Harbour Castle, Toronto has launched the first phase of its $50-million guestroom-revitalization project. The renovations are currently underway and scheduled for completion in 2025, in time for the hotel’s 50th anniversary celebration.

The initial phase encompasses the transformation of 450 guestrooms, the majority of which are now available for new bookings. The newly renovated bathrooms boast a cutting-edge water-filtration system, reducing the need for disposable plastic bottles.

The Westin Heavenly branding has been extended to the bathrooms, introducing a range of new amenities to enhance the overall guest experience. The commitment of wellness extends beyond the guestrooms, as demonstrated by the newly expanded gym. The facility features a zen-like yoga and Meditation Studio, complete with Studio by Lululemon.

“We’re thrilled to unveil a sampling of our fully renovated guestrooms, designed to promote health and wellness, superior rest, sustainability and the connection to our location between Lake Ontario and the bustling city of Toronto,” says Peter Gillis, general manager of The Westin Harbour Castle, Toronto. “These renovations are a testament to our commitment to providing an exceptional experience for our guests, and we look forward to completing the first phase.”

BRILLIANT IDEAS

Langham Hospitality Group (LHG) has launched Brilliant by Langham, a loyalty and experiences platform designed to meet the dynamic and evolving needs of its guests. Brilliant is replacing Langham Supper Club and 1865 Privilege by Langham, both of which now cease to operate.

Brilliant is purpose-built to deliver more rewarding, personalized and captivating journeys across 30 participating hotels under LHG’s brands, including The Langham Hotels & Resorts, Cordis Hotels & Resorts, Eaton and Ying’nFlo. Toronto’s Chelsea Hotel is also participating.

Signing up for Brilliant is free and all members receive special room rates and discounts at more than 100 restaurants. Members also earn status and rewards points for their stays and use of amenities. The former determines members’ tier levels while the latter can be redeemed for an expansive range of accommodation, dining and soon wellness rewards.

experiential offerings, such as private cooking lessons and dinners with celebrity chefs; behind-the-scenes dance and musical performance encounters; nature walks with guided mindfulness sessions; off-the-beaten-path tours hosted by local guides; traditional crafting workshops with seasoned artisans; and themed tea parties in picturesque locations.

growing demand for more rewarding, personalized and captivating hospitality encounters,” says Bob van den Oord, CEO of LHG. “By creating a system that enables us to offer guests immediate benefits, learn more about their preferences, compensate them for repeat business and craft bespoke experiential offerings for them, we’ve significantly enhanced our ability to build great memories.”

OPENING SOON

Basecamp Resorts is opening Basecamp Suites Revelstoke in B.C. on May 17.

The new hotel boasts 31 spacious suites – from three bedroom to micro-studios – each featuring a fully equipped kitchen, living/dining areas, a washer/dryer and mountain views. Additional amenities include communal outdoor rooftop hot tubs, high-end bedding and furniture, shuttle services and a full-service front desk.

The company has another new hotel property – Northwinds Hotel Revelstoke – which will be re-opening this summer after undergoing extensive renovations.

HISTORIC RESTORATION

Toronto’s historic Hotel Victoria has restored its lobby as a new social eatery called Mossop’s Social House (Mossop’s), which is named after the original proprietor of the hotel.

Led by general manager Jordan Gravelle and Food-and-Beverage manager Jhovaine Brown, Mossop’s is a bright and welcoming café, eatery and bar built to accommodate any type of social gathering. The vibrant space is rooted in history with early 20th-century decor including living-room-inspired seating areas, wrap-around bar, harvest tables and cozy nooks perfect for a productive working session or sipping cocktails while listening to a live band.

Mossop’s most unique feature is its Mosaic Room, a large multi-use space that’s named for the mosaictile flooring uncovered during Hotel Victoria’s 2023 renovation. Gravelle will use the space to host planned programming, including chocolate workshops and coffee tastings, and can also be rented out for special events.

STRIVING FOR EXCELLENCE

Fairmont Le Manoir Richelieu has become the first hotel in Quebec to receive its 5 Green Key Meetings certification, and the fourth hotel in Quebec to obtain 5 Green Key Eco-Rating Program certification from Green Key Global.

Fairmont Le Manoir Richelieu is one of the top 10 hotels in Canada, and the 19th in the world, to receive the prestigious 5 Green Key Meetings certification.

PROJECT PLANNING

Freed Developments has revealed its first-ever Freed Hotel and Residences project in Toronto (expected to launch in fall 2028). Located at 240 Adelaide Street West, this $800 million skyscraper will bring both Katsuya by Sam Nazarian's Disruptive Group by sbe and artwork by renowned Japanese artist Takashi Murakami to Toronto.

Designed by Chicago-based Adrian Smith + Gordon Gill Architecture and Toronto's DesignAgency (interior), the project will feature 100 luxury hotel rooms and 400 luxury condominiums with a Skybar/restaurant on the 63rd floor, boutique spa and a 10,000 sq. ft. Katsuya Restaurant on the second floor, marking its first location in Canada and 12th globally.

BLAIR KELLY

GAME ON

The best-positioned investors will be those who are ready to act on opportunity

BY FRASER MACDONALD , SENIOR DIRECTOR I CANADA , COLLIERS INTERNATIONAL HOTELS

Sustainedinvestor interest and strong operating conditions kept the hotel real-estate market active in 2023, with transaction volume of approximately $1.72 billion, pacing slightly ahead of 2022 levels ($1.63 billion). Despite interest-rate headwinds, confidence in the hotel asset class was evidenced by a diverse investor pool, including new entrants eyeing hotels in a quest for cash flow amidst inflationary pressures.

While overall investment levels remain below the past decade average of $2.1 billion, positive momentum in lodging demand across the leisure, corporate, and group segments as well as healthy debt-market conditions are supporting a bright outlook with significant investment volume closed and in the pipeline so far in 2024.

Debt availability for hotels improved in 2023, aiding momentum in the transaction market with involvement from a variety of credit unions, government sponsored funds, banks, and private lenders. Given the overall cost of capital continued rising during the year and loan-to-value (LTV) ratios have reduced, creative financing structures, including seller financing within the capital stack, played an important role. Asset and sponsor quality, as well as debt service coverage ratios (DSCR), remain paramount in the current environment. As articulated in the Colliers 2024 Global Investor Outlook, conditions this year will stay complex, but the best positioned investors will be those who are ready to act on opportunity.

The depth of capital has continued to diversify and the appetite for lodging investment remains high — the challenge lies in the limited supply of hotel opportunities on the market.

“As owners rationalize their portfolios by reviewing capital plans, re-financing terms and timing the cycle, we believe new offerings across the various segments will result in another strong year for the sector,” says Alam Pirani, vice chairman, Colliers.

2024 INDUSTRY OUTLOOK

❱❱ ACTIVE TRANSACTION MARKET: Strong liquidity with more buyers than sellers

We expect an uptick in transaction volume of $1.75 billion to $2.25 billion, fuelled by large single asset and portfolio deals, as well as a healthy mix of mid-market assets in secondary and tertiary markets expected to close this year.

❱❱ POSITIVE LENDING CONDITIONS: Debt funding available in hospitality sector with strong sponsors

Liquidity from a broad cross section

2023 TRANSACTION VOLUME BY SALE TYPE

of regional, national and international lenders has been one of the primary drivers of investment activity. Financing in today’s market is varied but available, and generally involves established relationships with lenders.

❱❱ RATIONALIZATION OF PORTFOLIO: More and more ownership groups are re-evaluating short and long-term strategic plans

Portfolio reviews, capital cycles, loan maturities, and partnership changes will bring assets to market. Each offering has a unique story and is generally met with buyers who see the upside opportunity if priced right.

❱❱ STRUCTURAL OWNERSHIP SHIFTS: Canadian hotel ownership structures continue to evolve

While we will continue to see traditional and largely private domestic groups as the dominant buyers, new non-traditional investment vehicles will also stimulate activity as the industry evolves, with more institutional and real-estate companies entering the hotel space.

❱❱ CAP RATES TO RE-GAIN RELEVANCE: Return to cap rate-based valuations, as price per room barometer becomes less of a main focus

As net income levels for hotel properties have stabilized and surpassed 2019 levels, more weight will shift to the capitalization of income-valuation methodology

Although assessing comparable trades and price-per-room values is common, high construction costs have pushed price-perroom ceilings and cap-rate valuations will form an important element in assessing values as forecasting income becomes more transparent.

❱❱ CLOSELY MONITORING ECONOMIC INDICATORS:

Investor sentiment is highly influenced by strength of the overall economy

Demand and consumer confidence undoubtedly has an impact on performance and investor outlook, but our resource-rich and diverse economy, infrastructure and demand generators will support a prosperous market through the long-term.

❱❱ INCREASED OFFICECONVERSION OPPORTUNITIES: Several failed office construction projects lead well to hotel conversion

With the dislocation of the office market, we see increased activity in conversion opportunities in major cities such as Toronto, Montreal, Vancouver and Calgary, as long as the building layout and floorplates allow for flexibility, ensuring compliance with local regulations and zoning, as well as reasonable all-in pricing post renovation.

2023 YEAR IN REVIEW

• Major metro and resort markets drove the lion’s share of investment volume (68 per cent) with strong pricing across all service segments setting record national average price per room metrics of $175,000, up 45 per cent year-over-year.

• 2023 saw seven major single-asset transactions over $50 million spanning the full-service, luxury, and resort segments in Canada’s primary urban and recreational markets, with all but one deal for continued use.

• Acquisitions for re-development and alternate use declined to typical

levels (14 per cent of volume) while distressed sales remained at historical lows (one per cent of volume), demonstrating a return to typical investment trends.

• Small-investment opportunities were still plentiful with transactions up to $10 million accounting for almost 75 per cent of the year’s trades (by number of trades) and a quarter of annual volume.

• Financing conditions improved year-over-year with participation from a variety of credit unions, government sponsored funds, banks, and private lenders; however, seller financing continued to play an important role.

• Private domestic buyers continued to lead the market given the limited headline deals and scarce portfolio investment opportunities available to attract major foreign and institutional players.

BUYER/SELLER MIX

Private domestic capital continued to lead the market with fluid investment activity by private investors followed closely by hotel investment companies with substantial acquisitions by major owners, including Sunray Group, InnVest Hotels, and Manga Hotels, among others. Given the relatively limited major

2023

investment opportunities on the market, activity by institutional groups and public companies was limited save for a handful of acquisitions by Oxford Properties, Knightstone Capital, Skyline Group, and VICI Properties with the balance of the institutional and other category comprised of purchases by First Nations investment groups, governments, and social-housing organizations.

Private investors and hotel investment companies remained the dominant sellers on the market with sell-side activity by PCs comprised of select dispositions by First Capital Realty, Century Casinos and Pandox AB.

EXPERTS IN FRANCHISING ACROSS CANADA.

SEGMENT ANALYSIS

Full-service assets played a dominant role in 2023, elevated from a handful of high-water mark deals while the limitedservice segment continued to pique investor interest with a nearly 80 per cent share of the year’s transactions. Focusedservice acquisition opportunities remained sparse; however, the segment remains highly sought after and has been at the forefront of new development proposals.

REGIONAL ANALYSIS

Transaction volume was evenly split across the country with Eastern Canada (Ontario and east) outpacing the Western provinces’ volume share by eight per cent. There were some interesting shake-ups in provincial distribution; Ontario, which typically drives half of national hotel volume slowed to a third while Quebec, British Columbia and Alberta saw double-digit growth year-over-year.

Canada’s largest metro markets (+1M population) accounted for close to 50 per cent of volume including downtown and suburban submarkets, pacing slightly above recent years given the increase in

luxury and larger full-service trading.

Primary recreational markets in Alberta, British Columbia and Ontario drove the bulk resort activity which hovered at 21 per cent of volume with a boost from major acquisitions by Oxford Properties and InnVest Hotels.

Trading in secondary and tertiary markets remained fluid, accounting for 60 per cent of the year’s transactions and a third of overall volume with lively activity in northern Ontario and British Columbia, the Okanagan Valley, Kamloops, and Winnipeg. ◆

FOUNDATION OF SUCCESS

A SOLID CAPITAL STRUCTURE SERVES AS THE BEDROCK OF A HOTEL’S SUCCESS

BY NICOLE DI TOMASSO

At its core, a hotel’s capital structure refers to the mix of debt and equity used to finance its operations, investments and expansions. Achieving an optimal capital structure is similar to crafting the perfect recipe, balancing the need for financial flexibility, risk management and shareholder returns.

Debt financing serves as a cornerstone for many hotel ventures. Hotels often rely on debt to fund property acquisitions, renovations, and other capital-intensive projects.

However, navigating the debt landscape requires a cautious approach. Too much debt can burden a hotel with high-interest payments, reducing profitability and hindering growth opportunities. Furthermore, the cyclical nature of the hospitality industry poses additional risks, making it imperative for hoteliers to maintain sufficient liquidity to weather economic downturns.

“The more debt you can get, the higher your return would be for the hotel owners involved. Some of the

disadvantages with debt financing could be more underwriting, periodic reporting and insurance requirements,” says Cameron Woof, AVP, Hotels & Syndication, CWB Franchise Finance. “Security is almost always first priority with mortgages for traditional lenders. If the mortgage isn’t paid, then technically the lender can take possession of the asset entirely. An ownership group needs to analyze how much leverage to optimize the return on the asset compared to the risk of not being

able to meet financial covenants or pay the mortgage.”

Equity financing, on the other hand, offers a different avenue for capital infusion. Whether through private investors, institutional funds or public offerings, equity provides hotels with capital without the obligation of re-payment. Moreover, equity investors often bring valuable expertise and networks to the table, fostering strategic partnerships and unlocking new growth opportunities. Despite its advantages, relying solely on equity financing may dilute ownership stakes and limit managerial autonomy, prompting hoteliers to strike a delicate balance between equity and debt.

“For most owners, traditional debt financing is the most efficient way to finance a hotel,” says Woof. “The reason for that is in the current rate environment, you’re probably around six to seven per cent in interest rate. Compared to typical return on equity expectations (for somebody that’s participating in the equity component), that six to seven per cent is much less.”

“The average capital stack, which is capital stack as debt and equity for a project, [from the] average lender is around 65 per cent, and 35 per cent on the equity side. The average hotelier likes to borrow a bit more leverage,” says Mark Kay, principal broker and president, CFO Capital. “They’d like to achieve 65 per cent, but they’d also like to aim for 70 or 80 per cent in some situations because they put less equity down and feel they can get a higher return. The problem is if a hotelier goes from 65 to 80 per cent debt and the hotel doesn’t perform as well, there’s a higher probability that the hotel doesn’t meet covenant. In that case, the lender may not re-new the mortgage or asks to find another lender to re-finance the property. That’s where the balance of 65 per cent seems to work out in a normalization.”

Kay continues, “A 65 to 70 per cent loan to value, three-to-five-year term and 25-year amortization is pretty consistent for branded hotels or established cash flowing non-branded hotels.”

Crafting an optimal capital structure involves a number of strategic considerations and challenges. Firstly, hotel owners must assess their risk

appetite and financial objectives, tailoring their capital mix to align with long-term growth plans. Factors such as market conditions, asset quality and competitive positioning also influence capital-structure decisions. Additionally, regulatory requirements, tax implications, and interest-rate fluctuations add layers of complexity, requiring careful financial planning and risk-management practices.

“There are other lending sources, such as non-traditional lenders, mezzanine debt and bridge financing,” says Woof. “These would typically be used for a shorter period of time to get an owner from purchasing a hotel to being able to pay it out and still be able to close on the transaction. But those are going to be higher interest, ranging between 10 to 14 per cent, sometimes more.”

In the current interest-rate environment, Woof says the choice between variable and fixed rate is top of mind for investors/owners.

“It depends on each individual investor’s business plan and how much risk they’re open to,” says Woof. “I can see interest rates coming down over the next year or two, but I’m not sure that it’s going to be as much or as fast as we might hope it’ll be. It’s important for a hotel owner to think about how much the certainty of a fixed loan payment means to them.”

Generally speaking, lenders seem to agree that financing, while still difficult, has continuously improved, revealing heightened appetites in hotel mortgages. Similarly, lending conditions remain favourable for experienced borrowers.

“Various banks and lending institutions are starting to show more interest in hotel financing than they have over the last two years,” says Woof. “The financing landscape for hotels is improving, however, given the current interest-rate environment, it’s challenging to find loan structures that work at higher leverage.”

“The debt markets are very liquid, which means there’s a fair amount of capital available for hotels for construction, acquisition and re-financing,” says Kay.

Increasingly, hotels are viewed as a favourable asset class across commercial real estate.

The top three locations for investment opportunities in Canada during 2024 are

“There’s a lot of real-estate investors that, prior to COVID, weren’t interested in hotels as a real-estate asset class, but because of the high interest rates impacting the condo market and the soft office market, they’re now much more interested in hotels,” says Monique Rosszell, senior managing partner, HVS (Montreal and Toronto). “That’s given a boost to the value of hotels because there’s a greater pool of potential owners. It’s also put downward pressure on cap rates, whereas other lending parameters have put upward pressure, including interest rates and discount rates.”

However, Rosszell cautions, “There’s a lot of interest in hotels but there isn’t a lot for sale given there’s still a buyer/ seller gap in values. There isn’t a lot of new supply because of high construction costs. As a result, hotels are cash flowing well given the additional barriers to entry, [such as] significant increases in land costs.”

Looking ahead, collaboration with financial advisors, industry experts and stakeholders is essential in devising robust financing strategies that withstand market volatility and economic uncertainties.

“There will be some economic headwinds that will create challenges for the hotel industry, but I think the health and experience within the industry in Canada will get us through that, and it’ll continue to be an interesting investment opportunity.”

ON LOCATION

SCOUTING THE RIGHT SPACE FOR THE RIGHT PLACE

BY ROBIN ROBERTS

You know what they say in the real-estate business about location, location, location?

Don’t say it. At least not to a developer, and especially not to Scott Duff, vice-president, Development, Canada, IHG.

It’s an over-used phrase, but that doesn’t mean he, and every other hotelier and developer, aren’t acutely aware of how important location is

when choosing a development site for a new hotel.

HAVES AND HAVE NOTS

“Aside from access and visibility, having supportive services in the immediate area can also be important,” says Duff. “For example, if you’re building a Holiday Inn Express, it may have a terrific complimentary continental breakfast

but that’s not going to satisfy you for dinner. So having access to a variety of restaurants is important.”

He adds that the type of hotel would usually dictate the type of demand generators. A holiday hotel would appeal to leisure guests who would prefer to be near shopping, attractions and nature. Business people would likely seek out a hotel near a convention centre or other industry.

“A large convention hotel works in markets where there’s access to major airports, urban markets and year-round travel, which are all very important when looking at a new build,” says Sylvia Occhiuzzi, senior vice-president, sales representative for Beechwood Real Estate Advisors Inc.

Both Duff and Occhiuzzi say that, while visibility — that glowing sign like a beacon off the highway, for example — is still important, it’s not as important as it used to be.

“People look at reviews and are much more thoughtful about where they’re staying, but location and accessibility are still very important,” says Occhiuzzi.

Duff says he can think of some hotels that have fabulous visibility in great locations but are a challenge to get to, requiring guests to navigate multi-lane highways, interchanges and one-way streets. But with widespread adoption of technology, many travellers simply plug their destination into their GPS, which will lead them to the front door.

LOCAL KNOW-HOW

Tapping locals for their insight can reveal a wealth of information. Duff offers the example of a Tim Horton’s franchise owner in a small northern Ontario community who wanted to build a hotel. Because the town was so small, Tim Horton’s initially had no interest in establishing a restaurant there. “[The franchise owner] ultimately convinced them to do it,” says Duff. “What he saw that the brand person didn’t was that right beside his site was a Greyhound bus stop. He knew that every day about 18 buses would stop there for 10 minutes, and everybody would get off to go to the bathroom, get a coffee and something to eat. Now, that wouldn’t necessarily translate to our business, but it made for a mighty successful Tim’s.”

There are also developers who are blinded by a beehive of activity and assume a hotel would fit right in. “Just because tens of thousands of tract houses are being built [along with] hundreds of thousands of square feet of retail and millions of square feet of warehouses and distribution centres, those people don’t need a hotel,” says Duff.

This is where location intelligence comes in — using location-specific data such as demographics, traffic, environment, economics and weather to guide site decisions. Duff says this analysis, however, is the purview of developers and consultants rather than hoteliers.

“We’re not the ones going out and taking down the site and buying the hotel. Because virtually all chains are what we call asset light, we don’t own the real estate, we’re simply licensing our brands through either long-term franchise or management agreements.”

Location intelligence should also assuage the fear that, once you’ve selected your site, built your big, beautiful hotel and thrown open your doors to welcome the world, a pulp and paper mill won’t break ground next door. “I think developers do a good job of surrounding themselves with the right consultants and partners to do their due diligence,” says Occhiuzzi. “They understand what the potential for a market is, what the local drivers are, what land is around them that may either be for sale or planned for new development and what that development is going to be.”

SETTING YOUR SITES

While bustling urban centres such as Vancouver, Toronto and Montreal are still attractive to developers, they’re out of reach for many of them due to higher costs and a lack of sites.

“People would love to build in those major markets, but availability is very limited and the cost of buying a site to build is still pretty prohibitive,” says Occhiuzzi. “Everyone still recognizes that the major markets —Toronto and Vancouver, for sure — are undersupplied. It’s just figuring out how to unlock land opportunities and how to reconcile the cost of that with the viability and feasibility of a hotel.”

Duff agrees. “The value of some of these sites is such that you can’t build just a hotel there, the economics may not support that. You end up having to do a mixed-use project that may have a residential component to it, for example. And forget about the land — construction costs are so high that it may not make

economic sense as a stand-alone hotel.”

He says during COVID, properties in major city centres that were driven by corporate demand essentially dried up. “But secondary markets, and particularly the tertiary ones, often continued to be very strong performers because they were being driven by everything from people in the logistics businesses to pipeline crews, road and rail crews, who continued to travel. We like tertiary markets, provided there’s a good underlying economic story there,” says Duff.

He says IHG is well-represented across the country with its mix of luxury and lifestyle brands in city centres as well as others that are a good fit for secondary and tertiary markets. A few exceptions are Halifax and Greater Quebec City, both of which are on the company’s radar.

But, Duff says, “Quebec City is an extremely hard market to penetrate and find new deals. There tends to be a strong predisposition to go the independent route. I think that’s just a testament to the strong local culture.”

LODGING FOR STAFF

Hotels planned for remote areas or have strong seasonality patterns will have to factor in staff accommodation, says Occhiuzzi. “Is there a local pool of labour to draw from or do they need to bring in staff? If they’re bringing in staff, have they considered staff accommodation? Is there enough in the market where people can stay or do they have to offer accommodation? And if they’re offering accommodation, that’s going to be another cost.”

Duff says that cost isn’t insignificant. “Take a place such as Banff, Alta. You don’t see a lot of big apartment buildings; you have a very limited housing stock and you’re not close to anything. Canmore is nearby but the cost of living is high.”

He also notes that hoteliers have to consider to how staff gets to your hotel, especially if they’re relying on public transit. If that’s not readily accessible, it can be problematic.

All told, the secret to a successful site is location. Then there’s location, followed by location.◆

CONFERENCE COMEBACK

DEMAND FOR MEETINGS AND EVENTS AT HOTELS SHOWS A SIGNIFICANT UPTICK

BY ROSELINE VICTORIA VIJAYAKUMAR

With the grips of the pandemic fading into the past, in-person conferences and events are staging a comeback. Business travel is on the rebound with corporate entities promoting in-person meetings to foster company culture, plan business strategies and brainstorm for the future.

“There’s significant energy from our customers around meeting, especially after being apart for a few years,”

says

Brian Gilligan, SVP of Sales & Distribution, Marriott International.

The trend of blending business and pleasure is evident in shouldernight bookings, where travellers extend their stay for pre- or post-conference activities to merge a few leisure days into business trips. According to stats provided by Marriott, business travel revenue was up three per cent in the U.S. and Canada in the fourth

quarter of 2023. Haley Luther, Communications manager, STR states, “For 2023, U.S. hotel group occupancy was up 7.5 per cent year-over-year.”

Revenue streams generated through hotel events and group businesses have been integral to the survival of the hospitality sector. These meetings and events provide room bookings and also generate income from other revenue sources

such as catering, banquet services and additional amenities.

Kate Sullivan, director of Sales at the Chelsea Hotel, Toronto says, “This business is booked in advance — sometimes two or three years ahead if citywide ― which gives the hotels their base business and is needed for a successful year.”

DEMAND RECOVERY

The economic impact of hotel events and group businesses dwindled during the pandemic, and the resurgence of demand for hotel rooms among business groups acts as the primary indicator of economic rejuvenation after the pandemic. With the resumption of face-to-face interactions, there’s a steady rise in bookings for meeting places and accommodation.

“Small-and medium-sized companies were leading the recovery in group demand early on and continue to remain strong; however, large meetings are back,” says Gilligan. “Several influences continue to impact some of those larger corporate groups as they get back on the road, including concerns these businesses may have about macroeconomic conditions and/ or sustainability goals they’ve set for themselves.”

TOP TREND

Sustainability continues to be a top trend, with meetings and events playing a prominent role in sustainability efforts. Meeting planners are evolving to adapt new expectations, such as impact reporting and carbon-offset opportunities.

Marriott has developed a carbon-offset program called Connect Responsibly, which aims to provide resources to all luxury, premium and select hotels across the globe, including learning materials and opportunities to provide carbonoffset options to customers.

“Customers have shared that these components matter in how they make business choices for their events,” says Gilligan. “The impact of a carbon-offset program was underscored through a global pilot conducted by Marriott in July 2023. Customer feedback revealed that an overwhelming 92 per cent would be encouraged to book Marriott-branded hotels in the future if such a program were available, emphasizing the growing importance of sustainability initiatives in

customer choices and the ROI [Return on Investment] for Marriott.”

Additionally, the increasing number of Gen Z meeting attendees has led planners and strategists to incorporate elements tailored toward their engagement, from shorter sessions to gamified interactive activities.

SLOW AND STEADY

“Q4 2023 group revenue rose seven per cent in the U.S. and Canada compared to 2023, and is expected to continue to be a meaningful driver of revenue growth,” says Gilligan. “As of year-end 2023, 2024 group revenues were pacing up nearly 11 per cent in the U.S. and Canada year-overyear. While certain industries, such as technology and finance, saw sequential improvement in demand during the quarter, the overall growth for the segment remains slow and steady, with business transient revenue rising four per cent versus 2022 in the U.S. and Canada.”

EMBRACING FLEXIBILITY

To keep up with the dynamic landscape of corporate interactions, hotels have started to embrace hybrid meetings and events. The combination of in-person and virtual meetings provides flexibility and also accommodates diverse preferences. This adaption ensures the continued relevance of hotels and their appeal to a broader audience in a world where the new norm spells remote collaboration.

Despite these efforts, Sullivan notes that the adoption of hybrid meetings is still in its early phases. “They haven’t really taken off in our experience,” she says. “Hybrid meetings (audio-visual) [are] extremely expensive so most conferences are face-to-face.”

EFFECTIVE MANAGEMENT

The evolving event landscape demands heightened expertise, and post-pandemic,

hotels have had to maneuver through various challenges in managing conferences and events. The looming labour shortage, increased general labour costs, additional administrative costs and rising food-and-beverage costs have necessitated strategic management.

Hotels have adopted innovative approaches to navigate these challenges by optimizing staffing models, streamlining administrative processes and effectively managing IT costs.

“This past year, we launched new in-depth onboarding guides, facilitated multiple virtual and in-person trainings globally and piloted a formalized mentor program to elevate talent and retention,” says Stephen Toevs, senior director of Culinary Development, Marriott International. “Our goal is to continue to boost our event team’s creativity, engagement and ability to be a true partner and advisor to our customers.”

The Chelsea Hotel, Toronto implements strategies to both attract and retain business from meetings and events. “We ensure that while groups are in-house, they have the best experience ever,” says Sullivan. “It’s much easier and cheaper to re-book a piece of business than to go out and replace it.”

INVESTING IN INFRASTRUCTURE

Hotels have begun investing significantly in new technology and infrastructure in consideration of the changing meetingsand-events landscape, such as upgraded audio-visual equipment, high-speed Internet and user-friendly platforms to enhance the overall event experience.

“Action stations around trending foods or seasonal ingredients have recently taken centre stage in the meetings-and-events space,” says Toevs. “This allows the operation to bring the kitchen energy into the event space, with a focus on portion control and reducing waste. These stations also encourage our chefs to interact with the guests onsite and offer a full gastronomic experience.”

Another innovative approach by Marriott to control expenses without compromising quality is to menu-match with other groups that may be taking place simultaneously. This strategy proves to be successful for hotels with multiple levels of meeting space and breakout-room options. ◆

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More Power Today, More Value Tomorrow

Marriott continues to evolve, while staying true to our roots. With our expansive portfolio of brands from luxury to midscale, dynamic sales and marketing platform, and a global scale that drives efficiencies, our owners benefit from clear competitive advantages and the opportunity to maximize the value of each hotel investment. Get started today and own your future.

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HOME AWAY FROM HOME

APARTMENT-STYLE HOTELS ARE GAINING TRACTION

BY AMY BOSTOCK

Apartment-style hotels offer investors a unique blend of stability and flexibility, while appealing to a diverse range of guests. Also known as “ApartHotels” or serviced apartments, the segment’s light staffing model offers cost savings and operational efficiencies.

“What makes [these properties] special is that you get that home-away-from-home feeling, but

with a brand,” says Sky McLean, CEO & founder of Basecamp Resorts, whose Basecamp Suites Revelstoke offers apartment-style accommodations in B.C. “When you have that setting, you can appeal to every demographic.”

The serviced-apartment model offers larger units than traditional extended-stay hotels, providing customers more space, a full kitchen

(dishwasher, stove, refrigerator), laundry and living space, while also having access to luxuries synonymous with hotel chains, such as health-andwellness centres.

According to Duncan Chiu, senior director, Lodging DevelopmentWestern Canada at Marriott, the furnished-apartments concept has gained traction. “From our perspective, we’ve seen a pretty

significant increase in leisure travel in general, and also extended families all travelling together at the same time. So, the furnished apartments meet that need for more space, the ability to park themselves for a longer period of time and a larger, residential-style apartment versus a traditional hotel room,” he says, agreeing that the product is not limited to just one market or one specific type of traveller.

LivSmart Studios by Hilton marks that hotel company’s entrance into the ApartHotel segment. According to Isaac Lake, brand leader for LivSmart Studios by Hilton, it was created because Hilton “saw the strength of our own extendedstay brands during the pandemic. We still saw staycations happening, insurance claims, project work and a strong travelling workforce. That inspired us to partner with owners to create LivSmart Studios, which gives us a new offering at a different price point for similar stay occasions.””

Corporate and business tenants often prefer serviced apartments over hotels, so investing in locations with a strong business presence can lead to consistent demand for the product. In addition to leisure and business travellers, Lake says other demand drivers for this type of product include hospitals, military bases and major projects such as infrastructure builds.

“For example, we know there's currently a big investment in building bridges, roads and other infrastructurerelated projects,” explains Lake. “So, you'll see those [apartment-style] hotels start to pop out of the ground ahead of major projects.”

In fact, the first LivSmart Studios property broke ground in Kokomo, Indiana, following an announcement about a Samsung plant and a Chrysler Fiat plant opening in the area.

Apartment-style hotels such as Apartments by Marriott Bonvoy, which is positioned in the premium and luxury tiers, are also catching the interest of developers and investors, thanks in part to the lean operating model. These properties will have no F&B offerings, no meeting space and limited housekeeping, allowing operating and labour costs to be cut significantly. But, says Chiu, all Apartments by Marriott Bonvoy will have a host when you walk in the front door

[Investors] may operate multi-family units or properties of that nature such as traditional apartments, but they’re seeing the resiliency of the [hotel] sector, the profitability in this space, and they’re wanting to dip their toes into the hotel space with this type of blended product. It’s an apartment-style hotel product, with significantly longer lengths of stay, so they’re starting to realize the profitability of the segment and expressing a ton of interest

- Issac Lake, brand leader for LivSmart Studios by Hilton

“so if there’s anything the guest needs, they still have someone to talk to, and someone to help them with any sort of issues that might arise.”

Lake says there are a lot of reasons why Hilton’s new brand, and the segment in general, makes sense for investors.

“I would start with a really competitive cost to build,” he says. “We had [LivSmart Studios] priced by an independent general contractor that builds all the Hilton brands across U.S. and Canada, and they came in between $116,00 and $120,000 a key, which is very competitive against anybody in our competitive set. Additionally, you’ve got very limited housekeeping, which reduces your need for labour and limited check-ins on a daily basis, because you may have, on average, 10 to 12 check ins versus the more transient hotel. So, all of that combined leads to a very aggressive Gross Operating Profit (GOP) margin. So, owners operating in this space are doing very well.”

Chiu adds that apartment-style hotels also open up the market to non-hotel investors looking to get their feet wet in the hospitality space. “We’re not just targeting hotel developers and hotel developers aren’t the only [investors] who are interested.”

Lake says Hilton is also seeing new investors approaching them from non-traditional hotel backgrounds. “They may operate multi-family units or properties of that nature such as traditional apartments, but they’re seeing the resiliency of the [hotel] sector, the profitability in this space, and they’re wanting to dip their toes into the hotel space with this type of blended product,” says Lake. “It’s an apartment-style hotel product, with significantly longer lengths of stay, so they’re starting to realize the profitability of the segment and expressing a ton of interest.”

And according to U.K.-based propertyinvestment company RPA Group, because this asset class is in the hospitality sector rather than the mainstream property market, serviced apartments can offer stability during economic downtowns or an under-performing market as business and leisure travellers will still require accommodation.

“At the end of the day, it’s a really lean and low-cost operating model,” says Chiu. “But the way the [Marriott] product is positioned allows developers to maximize average rate potential giving you greater profitability and flow to the bottom line, which is really great for developers.” ◆

INVESTMENT INTELLIGENCE

UNDERSTANDING THE OPERATIONAL ASPECTS OF A HOTEL IS VITAL FOR INVESTORS

BY MORAG MCKENZIE

As the number of travellers show no sign of slowing, it could be said there has never been a better time to invest in hotels. Hotels are an attractive investment as they can be an excellent source of

income as well as long-term real-estate value. CBRE’s Canadian Hotel Industry Outlook Report (Q3 2023) projects strong and stable occupancy and Revenue Per Available Room (RevPAR) growth for the Canadian

hotel industry through to 2027. Occupancy is projected to remain at a profitable 66 to 68 per cent, with RevPAR growing to $140 by 2027. This growth is driven by demand in Canada’s largest cities led by

Vancouver, Toronto and Montreal.

This strong financial picture has both first time and experienced investors looking for hotels with growth potential. But how do you measure this, and minimize the risks associated with any real-estate investment?

FINANCIAL BENCHMARKS

The hotel industry uses many financial benchmarks to measure success, including Average Daily Rate (ADR), RevPAR, occupancy and Market Penetration Index (MPI). Understanding each of these is critical when evaluating a hotel’s financial viability and an investor’s ability to grow profitability.

At InnVest Hotels, a prescribed scorecard is used to measure a hotel’s success.

“We use a matrix of five key measures to access a hotel for potential investment, including bottom-line performance, flow through, retention market share, RevPAR to market and guest-satisfaction scores,” explains Jeff Hyslop, senior VP, Asset Management and Investment, InnVest Hotels.

THE BIG PICTURE

While looking at the financial picture of an existing hotel is critical, it’s equally important to take a look at the big picture to imagine the hotel’s potential.

Tracy Prigmore, founder of She Has a Deal, an organization dedicated to creating pathways to hotel ownership for women, says, “We use a matrix of many scores, including occupancy, RevPAR, et cetera. However, what we’re really looking for is investing in hotels that we can create and expand value in. We need to see the potential to enhance revenue and guest satisfaction prior to investing,” says Prigmore. “A deal is something that you need to create a high opportunity for a great return on your investment for you and your fellow investors.”

KNOW YOUR COMPETITION

Industry experts agree that knowing your competitive market environment and your potential hotel’s place in it is critical for an investment decision. One resource many organizations and individuals turn to when trying to gain an understanding of a hotel’s market potential is STR Benchmarking.

“At We have a Deal, we provide our investment team with contacts and expertise on how to conduct due diligence, get a loan, structure a deal and raise capital,” says Prigmore.

LISTEN TO YOUR GUESTS

Finding a hotel to invest in is easy, but finding a hotel that’ll increase in value is more challenging.

“We’re listening to hotel comments. If the Internet is not up to standard or the guest check-in experience is negative, then that is an opportunity for us to grow revenue and return on investment (ROI) with a relatively small investment in people and resources,” says Prigmore.

Hyslop agrees that guest satisfaction is a key indicator of a hotel’s success. “We review all guest feedback and build the cost of solving that issue into our capital investment plan,” he says.

CHOOSING A BRAND

Identifying and solidifying the right brand for the right market is one of the keys to success in hotel investment. Investors often look at changing brands when investing and the potential upside of doing so.

“We purchased a Radisson Hotel that had mixed reviews and converted it to another brand to create real value for the property,” says Prigmore. “When you switch from one brand to another, you need to consider what you would be competing with in your new market and do your operational and financial analysis based on that. We also factor in renovation costs.”

operating costs and staffing models of the potential property to similar assets we manage. Hotels can be either over or understaffed, both of which can affect profitability and guest satisfaction,” says Hyslop. “We also look at what a normalized cash flow and stable income would be for the target asset.”

As labour is a hotel’s single biggest cost, training and retaining staff is also a key operational consideration.

Investors also need to look at the potential to increase value by increasing operational income both from rooms and other operations including food and beverage, meetings, spa, et cetera. ◆

CHANCE

However, while switching brands might seem like an ideal solution, it also comes with a cost.

“We compare the cost of brands, including their fees and required property-improvement plan, to the incremental value the brand will bring,” says Hyslop. “We also assess whether a brand is required or whether the property has enough value without it as was the case with a recent acquisition in Banff, Alta.”

Investing in a hotel means you’re investing in an ongoing operating business, so understanding how to efficiently and profitability manage it is critical. “We do a comparison of all

MITIGATING RISK

Many perceive hotel investment to be the riskiest form of real-estate investment as there are no long-term contracts. This makes managing risks to protect an investor’s capital critical. Risk mitigation strategies include diversification across different hotels or geographic areas to minimize the impact of adverse events on a single property and thorough due diligence by conducting comprehensive research to identify potential risks. Other strategies include implementing robust financial strategies and contingency funds for unexpected expenses to ensure stability, appropriate insurance coverage and adaptive management to stay current with market changes and ever -evolving consumer demands.

WHERE'S THE EXIT?

A DEFINED EXIT STRATEGY IS VITAL FOR HOTEL INVESTMENT

BY DANIELLE SCHALK

Akey aspect of investing in hotel properties is planning for when you no longer wish to hold that asset.

However, Monique Rosszell, senior managing partner, HVS (Montreal and Toronto), says, “It’s surprising how many people don’t have exit strategies.”

As Rosszell explains, planning an exit strategy “should be started at the very beginning — the beginning of the [purchase process], the beginning of the development.”

She also notes part of the reason a well-defined exit strategy is so important is because, “hotels are a much more complex asset class

to own than, say office buildings, industrial or apartments, because it includes the business.”

And because of this, a significant number of factors play a role in this critical aspect of investment planning. “It’s key to have the exit strategy defined up front because it impacts issues such as your franchise

agreement, your lender, who you’re going to work with [and] the terms of these agreements, because all of those do impact your exit,” explains Robin McLuskie, managing director, Hotels, Colliers.

Other key factors include how long you want to hold the investment, branding and whether you plan to operate the hotel or bring in a management company. “The exit strategy depends on the developer or owner’s vision — whether you’re going to invest in it; whether you’re going to brand, re-brand, de-flag,” Rosszell elaborates. “It depends what the developer wants to do and how deep their pockets are.”

Because every owner/investor’s vision for a hotel is different, any contracts or commitments associated with the hotel can be viewed as encumbering the property when being considered by future investors. “If you go to sell a hotel that has a brand and a management company, it’s encumbered, [because] it takes away the independence of a new buyer,” Rosszell explains.

That said, to a different buyer, those same contracts may be appealing. “If it’s a well-performing hotel with the management company in place, with the brand in place, that can be very attractive to some potential buyers,” Rosszell continues.

“It really is case by case,” agrees McLuskie, pointing to restaurant partners as another example. “If you’ve got a strong restaurant tenant and it’s a 10-year deal…in some cases that could also enhance your value because not everybody likes to run a restaurant.”

The location, age of the property and barriers to entry are also significant factors that must be considered. As Rosszell notes, “If there are high barriers to entry, your exit strategy is going to be that much easier in the sense that your value is going to be higher. In a lot of markets where there’s no land available, you can be pretty sure that whatever you purchased that hotel for, that value is going to be safe.” On the other hand, she stresses, “You shouldn’t be developing a hotel where there are no barriers to entry at a high price, simply because there may be so much new supply that comes in that could impact your performance [and value].”

It’s also critical to remember that an

exit strategy is not something you can simply set and forget. It’s important to re-assess the market and adapt strategies to fit current and evolving conditions.

“It’s one thing to say ‘I’m going to sell in 2025,’ but it’s another thing to know where the market is going to be, in terms of the economy and interest rates and other factors that are out of your control,” McLuskie explains.

And, the current economic environment may force some investors to re-evaluate their exit strategies. For example, if local demand generators have shifted in recent years, existing property investment plans (PIP) may not make sense any more.

Rosszell gives an example of nearing a renovation planned for the seven to 10 year mark. If, looking at the market conditions, it doesn’t seem likely to the investor that they’ll see a good return on investment (ROI) for a $30,000/key renovation, then there are a few options to consider. “I either brand down, which only requires $10,000/key, or I sell, or I go independent,” she notes.

And if a hotel is reaching the point that it’s no longer viable, there are, of course, other options. The property could be re-developed or converted to a different use. “If the land is worth more than the property, you’re going to demolish and re-build to get to the highest and best use,” Rosszell explains.

Ultimately, there are a number of risk factors that must be considered when planning or re-assessing the exit strategy for your hotel investments. “There’s the performance risks, the operating risks, and the investment risks — and that includes your CAP Rate, your ROIs, your interest rates,” Rosszell shares. She also notes, as these factors become more conservative — as they are in the current economic environment — there’s more risk for investors.

“They’re seeing their mortgages increase substantially. As of mid-year 2023, onward, everybody’s re-financing because their mortgages are due, and they’re [facing] much higher interest rates,” Rosszell explains.

In current operating conditions, McLuskie also highlights the value of assets, such as an effective onsite team, especially given the ongoing labour challenges. “The hotel is only as good as its employees, so making sure that there’s a strong team on site is definitely helpful for buyers.”

Given that not all factors that influence a hotel can be controlled, McLuskie recommends regularly re-assessing your exit strategy. “A good time to do that is annually, when you’re preparing your next year’s budget and assessing the market conditions.”

However, both Rosszell and McLuskie acknowledge that financial and operational factors are not the only issues that influences how investors approach exit strategies. Ultimately, the main factor that decides this aspect of investment planning is the intent of the investor.

“We talk about two different returns,” says Rosszell. “One is ROI, which is return on investment. We also talk about ROE, which is return on ego. There are definitely trophy assets out there that people are interested in owning because of the return on ego, so they’re willing to take a lower ROI because of the cachet of owning this trophy asset.”

“Different owners have different strategies, it’s not really one size fits all,” McLuskie agrees. “There’s some groups that have five-year ownership windows — they put the capital in, they invest it for five years and then they flip it, and there’s no emotion to it.”

But, of course, this isn’t always the case. “The beautiful thing about the hotel asset class, versus office or other industries, is that each hotel has a story, so you’re able to spin a sale based on what the story is,” McLuskie adds.◆

Crowne Plaza® Saint John Harbour View

avid™ hotel Toronto - Vaughan Southwest

Holiday Inn® Montreal Centre-ville Ouest

PUTTIN’ ON THE RITZ

Guillaume Benezech is crafting success at Toronto's Ritz-Carlton Hotel

BY ROSANNA CAIRA

When you’re the GM of the Ritz-Carlton Hotel in Toronto, you’d expect style to be part of your imprint. That’s clearly the case for Guillaume Benezech, who is crafting success with a focus on sophistication, passion and attention to detail.

Born in Bordeaux, France, Benezech landed in Toronto four years ago, just as the pandemic was wreaking havoc. His appointment marked a return to Canada, where his journey with the Ritz-Carlton began with the re-opening of its Montreal location in 2012.

Though Benezech started in the legal field, he quickly realized “It didn’t align with me,” he recalls. “Driven by my passion for luxury hospitality, I made a pivotal decision to re-locate to Switzerland, renowned for its world-class hospitality. There, I pursued my diploma at the prestigious Ecole Hôtelière de Lausanne.”

His first venture in hospitality industry took place in Lyon, France, where he served as managing director of the renowned three-Michelin stars chef Paul Bocuse. “Under the guidance of Mr. Paul ― as we affectionately called him ― I absorbed invaluable knowledge about food. His mentorship left an indelible mark on me, thanks to his boundless generosity, unwavering passion and visionary approach to success.”

Subsequent stints followed in Miami where he joined Four Seasons. “I was immersed in a world of discipline, organization and consistency — essential traits for any aspiring leader in luxury hospitality. This experience provided me with a comprehensive set of skills necessary to uphold the challenging standards synonymous with excellence.”

These days, with 15 years of experience in luxury hospitality management, and a proven track record of managing large and diverse properties, the charming hotelier has found his calling at the 263-room Toronto property, where he oversees a team of 400 associates.

“What distinguishes the Ritz-Carlton, Toronto property is its distinctive identity and forward-thinking vision. Through curated hotel and destination experiences, along with strategic partnerships and crafted stories, we’ve established ourselves as the number-1 Ritz-Carlton-managed hotel in the U.S. and Canada for guest engagement over the last three years, recognized as the top hotel in Toronto by Travel and Leisure magazine in 2023, and consistently awarded a five-star rating by the Forbes Travel Guide. We’re the only Toronto hotel to have received 13 Forbes Travel Guide stars in total.”

The hotel is currently focused on “implementing various initiatives centered around enhancing guest experiences, promoting sustainability, and this year our final phase will be about prioritizing wellness. These areas represent, in my opinion, the key trends driving luxury demand in the hospitality industry.”◆

QUICK QUIPS

Mission and philosophy

Creating an enriching work environment that prioritizes the quality of life and leadership excellence for our employees.

Lessons learned during the pandemic Rather than succumbing to panic, it's essential to approach obstacles with a strategic mindset.

How can hotels differentiate themselves? Rather than relying only on personalized experience, hotels should explore the preferences of their specific target audience to craft a distinct identity and approach that captures both the brand's culture and the essence of the hotel location.

HOSTED BY ROSANNA CAIRA

Check out the Checking In podcast to listen to conversations between editor and publisher Rosanna Caira and hotel industry leaders speaking about the issues impacting the dynamic hotel industry.

E46. LEADING WITH CARE FRANK MENEZES PROFESSOR & PROGRAM COORDINATOR, HOTEL OPERATIONS MANAGEMENT, SCHOOL OF HOSPITALITY & TOURISM MANAGEMENT | GEORGE BROWN COLLEGE

E45. MAKING IT HAPPEN LIZ HOVEY-SMITH GM | POMEROY KANANASKIS MOUNTAIN LODGE, ALBERTA KARA EDWARDS GM | THE ALYESKA RESORT, ALASKA

E44. THE NEXT GENERATION MARIE PIER GERMAIN VICE-PRESIDENT, SALES & MARKETING | GERMAIN HOTELS

HUGO GERMAIN VICE-PRESIDENT, OPERATIONS | GERMAIN HOTELS

E43. ADVOCATING FOR CHANGE

SARA ANGHEL PRESIDENT & CEO | GREATER TORONTO HOTEL ASSOCIATION

CHECKING IN podcast episodes are available at hoteliermagazine.com/category/media/podcast/ or find them on and