Canadian hotel transaction volume in Q2 2014 is reported at approximately $170 million, although this excludes the sale of the Fairmont Empress in Victoria, B.C. as pricing is confidential. With this significant sale excluded, year-to-date (YTD) transaction volume has reached approximately $374 million, less than half the volume reported at the same time last year. Further, approximately 20 fewer deals were completed during this time in 2014 versus 2013.
Other notable trends include:
• National per room pricing was reported at $67,000, well below $92,000 as reported in the first half of 2013. 11 trades were reported at over $100,000 per room versus 16 at this time last year.
• Only one hotel has sold for over $50 million, compared to four above this threshold at this time last year.
• Transaction volume in the first six months of 2014 was highest in Central Canada, with 51 per cent of the national total, or $189 million in volume split equally between Ontario and Quebec. Only one hotel sold in Eastern Canada, accounting for 1 per cent of total volume, with the balance (48 per cent) transacting in Western Canada.
• The majority of hotels sold were in tertiary markets although these accounted for just over a third of total volume and contributed to a fall in per room pricing. At this time last year, transactions were more evenly distributed between tertiary and primary markets, with the latter generally commanding a pricing premium.
• Private Investors dominated, representing approximately 43 per cent of total transaction volume, although Real Estate Companies/Developers were not far behind at 34 per cent.
• The number of court-ordered and lender driven sales is somewhat higher with four in the first half of 2014 versus only one YTD Q2 2013.
YTD Q2 2014 Smith Travel Research results indicate national hotel occupancy is 61.7 per cent, up from 60.0 per cent for the same period in 2013. Room demand grew by 3.3 per cent with supply growth of just 0.3 per cent. ADR for YTD June 2014 is up 2.9 per cent, pushing RevPAR up 5.9 per cent.
According to STR, lead markets for occupancy growth were Windsor (19.4 per cent), Toronto North/East (11.2 per cent), and Ontario Central and Mississauga (10.5 per cent), while the strongest ADR increases were reported in Vancouver North Area and Banff (6.4 per cent), and Vancouver Downtown (6.0 per cent). For RevPAR, Windsor led all markets with growth of 21.5 per cent, almost entirely attributable to significant recovery in occupancy.