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Hotel Transactions, Market RevPar, Occupancy Report |
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, 18 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.
Vancouver Island
Other British Columbia (including the Interior)
British Columbia
Alberta (Excluding the Alberta Resorts)
Saskatchewan
Greater Toronto Area
Looking forward through the last quarter of 2003 and into 2004, we believe that more hotel investors will look at Vancouver as a place where the hotel sector will continue to show signs of increased activity with the expectation that the market will prove to be resilient and that with the generally safe economic and political climate in western Canada, tourism and the convention business will rebound faster than in other parts of North America.. We are seeing signs that more hotel owners may be forced into selling, as the banks are starting to tighten their credit policies, as mortgages mature or hotels are unable to service the debt. AUGUST 2003: August has proven to be a more positive month with downtown Vancouver hotels posting an average occupancy of 85% with 12 hotels achieving better than 90%. These results, however, still leave this market at 2% lower than the same 8 months of 2002. Richmond and the hotels in the Vancouver International Airport market, achieved an average occupancy of 87% with 7 hotels over 90% occupancy and a 2.5% year to date decline over 2002. While occupancy is improving, hoteliers are tending to push for volume and are sacrificing ADR that has seen a decline in downtown Vancouver of 13% and in Richmond, 1.3%, 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. |
Contact:
Tyne Hospitality Services Limited Angus G. Wilkinson, CGA, MHCIMA
Eric S. Pateman, MHCIMA
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