Hotel Online  Special Report

2003 an Unbelievably Strong Year
for US Hotel Sales

CANADIAN LODGING OUTLOOK
December  2003 Year-to-Date


The Canadian Lodging Outlook is a joint monthly publication 
of Smith Travel Research and HVS International, 
Vancouver and Toronto, Canada
.
By: Toni Viens, MAI, HVS International - New York
February 2004

Major Hotel Transactions the Strongest Since 1998, Portfolio Purchases Increase, CNL Biggest Buyer of the Year, and the Hotel del Coronado tops the charts at $383
million. 

The HVS Research Department highlights 2003 in terms of the economy, number of major transactions, portfolios, the leading buyers and top trophy sales of the year.

World events, the U.S. economy and hotel sales moved in tandem during 2003. The early months of the year were marred by the pending war with Iraq, terrorist threats and world concerns related to Severe Acute Respiratory Syndrome (SARS).  The economy was inching along, unemployment was at a high of 6.2% and the Gross Domestic Product, in the first quarter, was a meager 1.4%.  The turning point came during the second quarter when new economic policies, coupled with the end of the combat portion of the war with Iraq, provided a stimulus to the U.S. economy.

The GDP in the third quarter rose to 8.4%, the highest in 20 years. By November of 2003, the unemployment rate had dropped to 5.7%, consumer spending was strong and hotel sales rocketed forward.

As can be clearly seen in the following graph, major hotel transactions (those hotels that transferred at $10 million or greater) increased dramatically in the third quarter of 2003, followed by a very strong fourth quarter.

Not only did the number of major transactions increase in the last six months of 2003, so did the dollars spent on hotel transfers. The following line graph shows the step up in dollars transferred on a monthly basis, beginning with May and growing to $1.2 billion in December alone.  Looking at major hotel transactions over the last 14 years, 2003 ended with a total of 188, approximately a 60% increase over the 118 major hotel transactions occurring in 2002. Only in the banner years of 1996, 1997 and 1998, when the Real Estate Investment Trusts (REITS) were in their prime, did we see more major hotel transactions occurring.

Portfolios played a major role in the market in 2003. A total of 443 sales from $3 million and above were recorded by the HVS Research Department. Of these, 203 sales or nearly 46% transferred within a portfolio.
.

.
.
The largest portfolio of the year was the CNL Hospitality Corp. purchase of 57 hotels from RFS Hotel Investors at a reported price of $383 million. During the year, CNL purchased four portfolios, along with a number of individual hotels, for a total price tag of $1.6 billion. Several high profile hotels purchased by CNL were the renowned Hotel del Coronado for $383 million; the Hilton Torrey Pines for $106.5 million and the JW Marriott (formally the New Orleans Grande) for $92.5 million.

Second in the top buyer category was Hospitality Property Trust which purchased 19 Candlewood Suites and 16 Staybridge Suites in three separate portfolios for a total of $340 million.  Coming in third for the year was Apple Hospitality Five. The company acquired 20 hotels mostly ranging between $9 and $15 million. Total dollars transferred were $330 million and included the purchase of the Marriott Suites Las Vegas for $42.5 million.

The Research Department of HVS International will soon be publishing its annual Major Transactions Survey which will include additional information on the major hotel transactions for 2003. A signature feature of this report is the listing of all hotel sales above $10 million including the hotel name, city, state, number of rooms and price per room.
.

CANADIAN LODGING OUTLOOK
HVS INTERNATIONAL - CANADA
December 2003 Year-to-Date

December 2003
Year to Date
Number
of Rooms
Occupancy Rate 2003 Occupancy Rate 2002 Average Room Rate 2003 Average Room Rate 2002 RevPAR 2003 RevPAR 2002 Room Supply % Change Room Demand % Change
Nova Scotia Area 1,693  58.9%  59.9% $82.80 $84.41 $48.77 $50.56 0.5% -1.2%
Halifax, NS 1,942 71.6% 71.0% $123.71 $117.98 $88.58 $83.77 3.3% 4.1%
Montreal, QC 14,988 63.4% 67.0% $121.68 $122.55 $77.15 $82.11 -0.1% -5.5%
Quebec City, QC 3,170 61.1% 66.8% $133.29 $140.42 $81.44 $93.80 0.5% -7.9%
Quebec Area 3,416 55.2% 57.0% $90.31 $89.34 $49.85 $50.92 0.0% -3.2%
Toronto Downtown 11,349 58.6% 67.8% $145.34 $166.18 $85.17 $112.67 -2.0% -15.3%
Toronto North/East 6,743 51.9% 59.7% $107.02 $111.52 $55.54 $66.58 3.4% -10.2%
Toronto Airport/West 6,514 62.2% 65.8% $106.80 $111.07 $66.43 $73.08 -4.7% -9.8%
Ottawa, ON 6,947 61.9% 63.3% $125.63 $126.15 $77.76 $79.85 2.0% -0.3%
Ontario East 3,895 53.6% 56.2% $92.95 $92.18 $49.82 $51.81 0.1% -4.4%
Ontario Southwest 8,150 55.6% 60.6% $92.37 $91.97 $51.36 $55.73 1.2% -7.2%
Ontario North 5,648 47.9% 51.2% $86.85 $92.77 $41.60 $47.50 0.3% -6.2%
Niagara Falls,  ON 7,641 52.1% 58.8% $114.81 $124.81 $59.82 $73.39 2.4% -9.2%
Ontario Central 7,921 57.3% 60.6% $97.89 $98.72 $56.09 $59.82 3.5% -2.2%
Winnipeg, MB 3,612 59.6% 60.8% $90.58 $90.76 $53.99 $55.18 0.8% -1.3%
Regina/Saskatoon, SK 3,801 57.5% 60.6% $86.88 $84.41 $49.96 $51.15 -0.9% -5.9%
Calgary, AB 5,253 60.6% 62.7% $115.28 $117.23 $69.86 $73.50 0.0% -3.4%
Edmonton, AB 5,955 62.3% 72.9% $97.82 $93.75 $60.94 $68.34 1.7% -13.1%
Alberta Area 8,224 57.9% 60.6% $91.42 $91.57 $52.93 $55.49 1.9% -2.5%
Mountain Regions, AB 1,745 61.7% 66.8% $240.87 $222.04 $148.62 $148.32 -0.2% -7.8%
Vancouver, BC 13,075 61.5% 63.2% $127.90 $134.27 $78.66 $84.86 0.4% -2.4%
British Columbia Area 8,788 51.8% 51.6% $116.32 $118.96 $60.25 $61.38 1.4% 1.7%
Victoria, BC 3,018 59.2% 58.9% $106.54 $119.16 $63.07 $70.19 -0.1% 0.4%
Provinces
Alberta 21,146 60.1% 64.9% $114.40 $113.59 $68.75 $73.72 1.3% -6.2%
British Columbia 26,282 57.8% 59.4% $124.73 $129.46 $72.09 $76.90 0.9% -1.8%
Manitoba 3,998 59.2% 60.5% $89.29 $89.53 $52.86 $54.17 1.0% -1.1%
New Brunswick 3,060 61.0% 62.0% $95.43 $94.67 $58.21 $58.70 0.7% -0.9%
Newfoundland 1,521 66.1% 66.3% $109.51 $106.45 $72.39 $70.58 0.0% -0.3%
Nova Scotia 3,635 65.9% 66.2% $107.31 $104.43 $70.72 $69.13 1.3% 0.9%
Northwest Territories INS INS INS INS INS INS INS INS INS
Ontario 63,846 57.4% 62.3% $112.91 $120.68 $64.81 $75.18 0.7% -7.1%
Prince Edward Island 889 51.8% 51.0% $98.34 $97.73 $50.94 $49.84 0.0% 1.5%
Quebec 22,567 61.1% 64.7% $129.03 $131.56 $78.84 $85.12 0.0% -5.5%
Saskatchewan 5,005 55.0% 57.0% $81.74 $79.10 $44.96 $45.09 -0.4% -3.9%
Yukon Territory 221 INS INS INS INS INS INS INS INS
Canada 152,170 55.5% 58.7% $105.75 $108.36 $58.69 $63.61 0.7% -4.8%

 
 
The 2003 Major Transactions Survey can be purchased for $250 through Joan Raffetto of the HVS New York Office. Ms. Raffetto can be reached at 516.248.8828 extension 231 or by e-mail at jraffetto@hvsinternational.com.  The Research Department undertakes individual sale searches or other research requests. Please contact Carmen Barros as 407.566.1956 or cbarros@hvsinternational.com for additional information.

 
Contact:
Selina Lai
HVS International – Canada
2120 Queen St. East, Suite 202
Toronto, ON M42 1E2
(416) 686-2260, ext 21
(416) 686-2264 FAX
slai@hvsinternational.com
www.hvsinternational.com

Also See 2003 Canadian Hotel Transaction Survey / Canadian Lodging Outlook / January 2004
2002 Canadian Hotel Transaction Survey / Canadian Lodging Outlook / Feb 2003
How To Get The Best Sales Price; Positioning Your Hotel for Sell / Stephen Rushmore / Canadian Lodging Outlook - July 2003 YTD / September 2003
Lodging Market Impact of Hosting Olympic Winter Games; Will Salt Lake City Experience Apply to Vancouver and Whistler? / Canadian Lodging Outlook - June 2003 YTD / August 2003
Year-to-date Occupancy through April is 50.4% for all of Canada / Canadian Lodging Outlook - April 2003 YTD / June 2003
SARS and Its Impact on Tourism in Toronto / Canadian Lodging Outlook - March 2003 YTD / May 2003
Hotel Values in Europe - Current Trends / Canadian Lodging Outlook - December 2002 Year-to-Date / Feb 2003
2002 Canadian Hotel Transaction Survey / Canadian Lodging Outlook / Feb 2003
Performance Clauses Essential In Hotel Management Contract / Stephen Rushmore / Canadian Lodging Outlook / Dec 2002
Separating the Hotel Looker From the Hotel Buyer / Stephen Rushmore / Canadian Lodging Outlook / Sept 2002
Making The Ideal Hotel Investment / Stephen Rushmore / Canadian Lodging Outlook / Aug 2002
Reporting In at Six Months..../ Canadian Lodging Outlook / July 2002
The Global Approach To Hotel Valuations / Canadian Lodging Outlook / June 2002
Hotel Insurance Premiums on the Rise? / Canadian Lodging Outlook / May 2002 
Hotel Development Cost Can Determine Feasibility / Canadian Lodging Outlook / May 2002 
Hotel Internet Distribution Channels / January 2002 Month-to-Date Results / Canadian Lodging Outlook / April 2002 
2001 Was a Great Year If You Were in Edmonton! / December 2001 Year-to-Date Results / Canadian Lodging Outlook / Feb 2002 
2001 Canadian Hotel Sales / Canadian Lodging Outlook / Jan 2002 
The Effect on Capitalization Rates and Discount Factors After September 11 / Canadian Lodging Outlook / Dec 2001 
So How Bad Was September for Canadian Hotels.. Pretty Bad! / Nov 2001
So How Bad Was September for Canadian Hotels.. Pretty Bad! / The Canadian Lodging Outlook / September 2001 
Have Hotel Values in Canada Declined Since September 11th? You Bet They Have / The Canadian Lodging Outlook / August 2001 
The Popularity of Boutique Hotels / The Canadian Lodging Outlook / July 2001 
Rising Energy Costs Cause Concern in the Lodging Industry / The Canadian Lodging Outlook / June 2001 
Niagara Falls: With Supply Comes Demand / The Canadian Lodging Outlook / May 2001 
Does Supply Generate Demand? / The Canadian Lodging Outlook / May 2001 
Optimism With a Hint of Caution, As Analysts Predict a Softer Year for the Canadian Hotel Industry / Mar 2001 
Limited-Service Growth in Canada - Where’s it Going? / The Canadian Lodging Outlook / January 2001 
HVS Canada in Review - Year End 2000 / The Canadian Lodging Outlook / March 2001 
Canadian Lodging Outlook / May 2000 Year to Date Statistics / HVS International - Canada / July 2000 
The Rule of Thumb Method...Does It Still Hold Weight? / Elaine Sahlins - HVS / Oct 2000
What’s Hot and What’s Not in Western Canadian Hotel Markets / Mar 2000


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