The biggest names in the Canadian hotel industry came together under one roof last week at the 2017 Western Canadian Lodging Conference, held at the Fairmont Waterfront Vancouver. The one-day event was packed with back-to-back panels, running from 8 a.m. to 5 p.m.

To kick off the day, Susie Grynol, president of the Hotel Association of Canada, gave a warm welcome to the crowd from the big screen, as she could not attend the conference in person. Among her updates, Grynol shared that she is working with the government of Canada to improve labour shortages and more will be announced about the initiative soon. “I want to encourage you to get involved,” she said. “Go to fairrules.ca and send a pre-populated letter to your MP.” She concluded with a ‘thank you’ to the audience. “Thank you for being innovators and for building exceptional hotels. Thank you for hiring thousands of people across the country. It is a privilege to represent this country. Have a great conference.”

The event’s first presenters, HVS managing director and partner, Carrie Russell and CBRE Hotels VP, Scott Duff provided an in-depth update on the 2017 financial performance of hotels in Western Canada. The overall trend showed a strong B.C. and Manitoba and a slowly recovering Alberta, but a deeply troubled Saskatchewan, where RevPAR dropped by nearly 5.9 per cent. As a nation, however, 2017 has proved to be a record-breaking year. For the first time, national RevPAR will exceed $100 — poised to grow more than seven per cent by the end of the year — Russell announced. It marks the largest increase in the cycle and the eighth-consecutive year of growth. Russell attributed several factors to this year’s impressive numbers, including Canada’s 150th anniversary, the continuing strength of the Canadian dollar and tourists’ enduring perception of Canada as a friendly and welcoming destination. “The U.S. tone and policy is really driving people into the Canadian market,” said Russell. “We’re seeing U.S. traffic up, four per cent; European traffic is up by almost two per cent; and Asian traffic has increased by 7.8 per cent. Mexico is up a whopping 51 per cent as Mexican travellers who want to take a vacation outside the country are not seeing the U.S. as a very welcoming place right now.” Looking ahead to 2018, continued supply growth is expected with a projected increase from half of a per cent in 2017 to one per cent in 2018.

Next on stage, Lorne Burns, partner at KPMG LLP, moderated an impressive panel of speakers on the topic of investing in Canada. Panelists included Curtis Gallagher, SVP of Hotel Investments at Cushman & Wakefield Ltd.; Dr. Azim Jamal, CEO and co-founder of Pacific Reach Properties; Jonathan Korol, president of SilverBirch Hotels & Resorts; Bobby Wang from McCarthy Tétrault LLP; and Benjamin Walter, director at Aareal Bank. The speakers had a chance to share what each was currently working on and what his focus will be, going forward. Asked the hypothetical question of how he’d invest $500 million today, Azim Jamal answered, “I’d park 25 per cent in what I call proxies for cash — instruments that earn me a little bit of yield but are accessible if I face a problem. The rest of it, I would deploy in hard assets in Canada and select U.S. markets. I’d split that 50/50 because we’ve found there are markets in the U.S. that have very good prospects of becoming winners in five-plus years.” Gallagher, on the other hand, suggested partnering with developers to invest in new hotels. “Developers have the best locations in all of the markets,” he said. “Find your way to invest in a hotel.”

The first half of the day concluded with another panel of superstars from the hospitality sector taking the stage to discuss the ins and outs of buying and selling properties — exploring difficult questions such as, whether to sell a property or hold and renovate, best ways to approach a sale from both the buyer’s and the seller’s perspective and legal complications to look out for. David Larone of CBRE Hotels moderated the discussion. Speakers included Carolyn Genest of d3h Hotels; Ron Mundi, Mundi Hotel Enterprise Inc.; Ryan Pomeroy, Pomeroy Lodging LP; and Barry Remai, Remai Hospitality Group. The audience was kept entertained for the full hour by Pomeroy’s characteristically witty remarks and humorous anecdotes. On a more serious note, however, Pomeroy shared his view on Saskatchewan’s future. “I’m interested in places that don’t look so good,” he shared. “So I’d be interested in Saskatchewan right now. I’m a believer that not every market is going to be bad forever. You can’t time how long they’re going to be bad or good for, but that change is inevitable.” Gallagher chimed in on the sentiment by pointing to Alberta’s resurgence since 2016. “Alberta is going to recover,” he said. “And when it does, there is going to be a ton of opportunity for both people who want to exit and enter the Industry. The initial return might not be that great but, once the market is on turn, you’ll have an opportunity to have a great long-term asset.”

To wrap-up the session, speakers were asked to each provide one key takeaway. Pomeroy stressed the importance of investing in properties that fit a company’s culture. “We’ve learned over time not to invest in properties that are just a good deal…If I’m honest with myself, we’ve bought a few hotels that are good investments but they never get as much attention as the other [properties] because they just don’t fit our culture that well.” Both Mundi and Genest stressed the value of investing most in people. “If you’re investing in your people, that is a great decision to make because they are the ones on the front line who are making you the bottom dollar,” said Genest. “So, anytime that we have the opportunity, we focus on culture. It’s really the people who are your best asset.”

The afternoon’s first group of speakers, moderated by Brian Flood of Cushman & Wakefield Ltd., continued the discussion of buying and selling properties with an emphasis on legal and brokerage matters. Jason Arbuck of Cassels Brock & Blackwell provided valuable tips on handling both ends of a deal. He cautioned buyers not to wait until the last minute to commission a lawyer. Most often, lawyers are called in for the final signing of documents, when it is all too late if legal issues are found. “Clients will often call and say, ‘We just need to you to look this over. We’re signing today,’” said Arbuck. “They’re not looking for you to change anything at that point. But, as a buyer, you want to think about what legal issues you may have. Often, there’s a small permitting or licensing issue that hasn’t really impacted operation but you know something is not quite right as the lawyers start to go through it and they’re going to ask you about that.” In Arbuck’s experience, it’s these small details that sometimes attract the attention of lawyers, which in turn, create a long and tedious review process. Therefore, Arbuck advised potential buyers to begin the legal proceedings early in the sale process.

Billy Coles, president and CEO of BCP Construction and CCR Hospitality, had strong words of advice for potential sellers. “When you’re going to sell a property, make sure you know your numbers,” he said. “Make them give you an offer, so that you don’t give a number that might be lower than what you want. But make sure you know what you’re willing to sell for. If the opportunity comes, press the button. Know what you want and do it. Don’t wait.” He proceeded, in the same blunt manner, to give more advice to sellers. “As hoteliers, we stay at a lot of hotels, and you can walk into winners and you can walk into losers. Nobody wants to buy a loser, so don’t be a loser,” he quipped. “Make sure to take care of your hotels.” The rest of the speakers agreed that the best approach to selling a property is to be honest and share everything from the beginning. “It never looks good if a buyer has to go digging for information and finds things that you’ve been hiding,” warned Phil Milroy, president and CEO of Westcorp. “And they will find out.”

All panelists were also in agreement that executives should avoid transparency with staff during an acquisition process as it has almost always proven to be messy in their experience. You may feel compelled to involve your staff in the process because they’re part of the family and you care about them, said Milroy, but you have to practice great caution because it can backfire.

The afternoon finished with two more sessions, both focusing on Canada’s current economic and political atmosphere and its impact on the nation’s hotel industry. Nik Nanos of Nanos Research and Craig Wright, SVP and chief economist at RBC, presented a political/economical duet, which fuelled an engaging discussion between the presenters and the audience. Much of Nanos’s focus was on the impact of current U.S. politics on Canada. He believes that Canada has much to gain from the negative perception that the world harbours toward the U.S., today. Whether or not there is actual hassle for international travellers at the American border as a result of Trump’s presidency is irrelevant, as Nanos’s research shows that people already believe there will be unnecessary hassle. As a result, large international conferences and events that historically took place in the U.S. will be shifted to the next closest place, generating more tourism for Canada. “While we have people’s attention, we should be thinking about how we can convert them from a single visit to the long-term perspective of improving tourism.”

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