Hotel real estate investors are moving ahead with plans to buy and develop B.C. properties as they anticipate more people travelling for leisure and for business.
With severe cases of COVID-19 on the decline, governments are removing travel restrictions and helping the hospitality sector recover from its biggest business decline in decades, if not ever.
Cadillac Fairview Corp. Ltd. is one property owner eager to expand hotel operations.
It recently filed a development permit application with the City of Vancouver to build a luxury hotel at the corner of Howe and West Georgia streets, where the Four Seasons Hotel operated for more than 40 years until closing in early 2020.
Cadillac Fairview senior vice-president Tom Knoepfel told Business in Vancouver (BIV) that his company plans to own the hotel and contract a hotel brand to manage it.
The other empty marquee luxury hotel site in downtown Vancouver is at 1161 Georgia St. W., where the Trump International Hotel and Tower previously operated.
Owner Holborn Group’s CEO, Joo Kim Tiah, told BIV his company is not yet ready to provide information on that site’s future.
Toward the end of the pandemic, there was a surge in investor interest to buy hotels in B.C.
Colliers International data show 39 hotel real estate transactions valued at more than $1 million in 2021. That is the highest number of those deals in at least a decade.
Some owners wanted to exit the sector because it was in such a deep downturn, while other investors could see foresee a sector rebound, according to Russell Beaudry, senior director for hotels at Colliers International.
“In the year preceding the global pandemic, hotel owners had little reason to sell, since operating performance was so robust,” he told BIV.
Buyers for those hotels in 2021 spent about $453 million, which was the second-highest total in the past decade.
The only recent year investors spent more to buy hotels in B.C. was 2015, when buyers spent $759 million. That year was an anomaly because several large hotels – the Westin Bayshore, the Westin Grand and the Fairmont Hotel Vancouver – changed hands.
Beaudry expects heightened demand for hotel real estate to continue, and for developers to move ahead with building new supply.
Peterson Group and Coromandel Properties Ltd. announced March 8 that they spent an undisclosed amount to buy from Wall Financial Corp. a mixed-use project on three-quarters of an acre next to Oakridge Centre.
Peterson senior vice-president David Evans told BIV that the transaction value was less than $85 million, and that the hotel component of the project is about 40 per cent of the development, which also has a residential tower and retail space.
The site has been rezoned, but the new owners need to go through the development-permit process.
“We’re believers in the hospitality business,” Evans said.
Peterson is a part owner of the Shangri-La hotels in Vancouver and Toronto, the Fairmont Pacific Rim hotel in Vancouver, and the Carmana Plaza extended-stay hotel in Vancouver.
Another Peterson hotel project, at Metropolis at Metrotown, is in the early planning phases, Evans said.
“Peterson has a large real estate holding,” he said. “We have all different types of properties and hospitality is a core component.”
He said Peterson is “opportunistic” in its approach to acquiring real estate, and that adding more hotels to its portfolio is possible.
In addition to development companies working through the process to build new hotels, governments are buying hotels to convert into social housing, and investment companies are buying hotels to convert into condominium towers.
The B.C. government has bought hotels and converted them into social housing since at least the 1990s, but BC Housing was particularly active in 2021.
Its biggest deal was to spend $63.8 million for the Patricia Hotel at 403 Hastings St. E. and a nearby parking lot. Some other purchases included $4.9 million for a hotel at 956 Main St. and $6.8 million for one at 1012 Main St.
The Crown corporation also purchased the Vancouver Central Hostel at 1025 Granville St. and the Ramada Inn at 435 Pender St. W.
Developers have also been eyeing hotel sites for their redevelopment potential.
Capital (Canada) Trading Co. recently sold its iconic 1954-built City Centre Motor Hotel at 2111 Main St. to Nicola Wealth.
No one at Nicola Wealth was available to confirm plans for the site, but real estate watchers expect the company to redevelop the site with condominiums.
“They do have a development plan – that’s for sure,” Beaudry said. “It won’t be a hotel.”
Onni Group is another developer excited about the hospitality sector. It developed a 40-storey tower at 1335 Howe St. that boasts a 110-suite extended stay hotel known as Level Vancouver Downtown-Howe, which opened in February.
Onni has two other Level-branded hotels that have extended stay units: a 133-unit one at 1388 Richards St., and a 188-unit one at 1022 Seymour St.
Of those Seymour Street units, 20 are zoned to also allow nightly stays, and Onni is aiming to have the City of Vancouver rezone the entire property to allow single-night stays, according to Onni chief of staff Duncan Wlodarczak.
Onni also envisions building a new hotel next to the future Great Northern Way-Emily Carr station along the Broadway Subway, and Wlodarczak said his company is awaiting clarity from the city on guidelines for what exactly can be built on the site. •
