3rd Qtr 2003 - Hotel Transactions,
Market RevPar, Occupancy Report
|January 2004 - The first nine months of 2003
has seen a marginal increase in market transactions when compared to recent
years in Western Canada. However, the opportunity to complete more
transfers has been reduced as the price spread between the expectations
of purchasers and vendors was still too wide. To date this year, 19 hotels
transactions have taken place in Western Canada as listed below.
One of the largest sales listed above, was the Parkhill Hotel in Vancouver’s West End residential district that was bought for conversion into residential apartments as the hotel market in downtown Vancouver continues to decline. During the late part of September, Sutton Place Hotels, stepped into the market again, after many years of inactivity, and purchased the Sheraton Grande in downtown Edmonton. This hotel was first opened as a Four Season’s over 26 years ago and was later sold to Hilton International and finally to Gencom from Houston who franchised with Starwood’s Sheraton brand. The general perception is that until the margin between the buyers’
expectations and sellers top price narrows, few hotel transactions will take place, but clearly that time is now changing. With the banks not cooperating in financing hotels, this will further frustrate hotel buyers in being able to close deals without vendor financing.
On a positive note, the announcement that Vancouver/Whistler has won the right to host the 2010 Winter Olympic Games should provide a needed boost for the B.C. economy and encourage international investment in our province. Vendors, however, need to maintain some sense of reality in their pricing expectations, as few buyers will be willing to pay the prices that are being asked.
This problem is enhanced by the fact that during the past couple of years, most properties have faced a substantial decline in net operating income. As a result, asking prices with cap rates of 10% and below, (and they may be negative due to negative cash flows), are deterring investors.
This trend indicates that there are a lot of hotels unofficially on the market for sale in Vancouver and throughout our province, however, the majority of buyers are looking for deals with upside potential, so only properties that at least have some net income to cover debt service, are likely to sell, unless receivership or bankruptcy scenarios force the sale of the hotel.
Tyne Hospitality Services Limited is a commercial real estate brokerage firm specializing in the sale of hotels and resorts in western Canada. For more information, we invite you to visit our website at www.tynehospitality.com or contact us by phone, fax or email.
The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Tyne Hospitality Services Limited.
Tyne Hospitality Services Limited
Angus G. Wilkinson, CGA, MHCIMA
Eric S. Pateman, MHCIMA
|Also See:||Hotel Market Update in Western Canada; Hotel Transactions, Market RevPar, Occupancy Report / Tyne Hospitality / September 2003|
|2003 Canadian Hotel Transaction Survey / Canadian Lodging Outlook / January 2004|