The first half of 2018 registered just over $800 million in lodging transactions nationally, pacing 10% below comparable levels in 2017 ($893 million) when excluding strategic and M&A transactions — a major component of activity in the first half of last year at $1.3 billion. Following an influx of foreign and institutional capital into hotel real estate from 2013 to 2017, there is a mix of private domestic buyers driving activity in 2018, supported by a strong hotel operating and economic landscape, motivated buyer pool and dynamic debt markets.
Despite a decrease in sizeable investment sales in major markets which impacted overall volume, the first half saw a strengthening of volume in Western Canada and overall fluid trading in secondary and tertiary markets across the country. Colliers estimates that full-year 2018 volume should range from $2.0 to $2.5 billion, declining from recent years on a moderation of available opportunities for sale in major urban centres.
Eastern Canada (defined as east of Manitoba) led the country for transaction activity with 36 trades totalling $558 million in volume (70% of the national total).
Quebec overtook Ontario as the top province for investment volume with the sale of several full-service properties including Le Centre Sheraton Hotel and Marriott Château Champlain in Montreal and the Delta Quebec in Quebec City.
Western Canada (defined as west of Ontario) saw rebounding sales activity with a nearly 80% increase in the number of trades and more than 50% increase in deal volume year-over-year. This was buoyed by elevated activity in Alberta and the resumption of trading in Saskatchewan.
Nearly 40% of transaction volume was located in secondary and tertiary markets ($301 million) with pockets of investment activity seen in Northern Ontario, Atlantic Canada and Southeastern British Columbia.
The preceding was an excerpt from the Colliers International Hotels INNvestment Report for Q2 2018. You can find a full copy of the report via Colliers International, linked here.