From the Editor: Taking the Pulse

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Almost two decades after the first WOW poster debuted, amidst a flurry of activity driven by REITs, the hotel landscape continues to evolve on a daily basis, with hotels changing hands regularly. Two years after the mammoth takeover of Starwood Hotels by Marriott,the M&A pace may have subsided somewhat, but buying and selling will always be at the forefront of this industry.

According to Colliers’ recent Investment Report, the pace of investment has slowed in the second quarter of this year, but western hotels are starting to rebound after a tumultuous few years. In the first half of 2018, there was a little more than $800 million in lodging transactions nationally — 10 per cent below comparable levels in 2017 ($893 million) when excluding strategic and M&A transactions. At the same time last year, investment in the country totalled $1.3 billion.

Between 2013 and 2017, there was an influx of foreign and institutional capital into hotel real estate but, in 2018, there’s a mix of private domestic buyers, driven by a strong hotel-operating and economic landscape, motivated buyer pool and dynamic debt markets. Despite a decrease in the larger investment sales in major markets, which impacted overall volume, the first half of the year has seen a strengthening of volume in Western Canada and overall fluid trading in secondary and tertiary markets across the country.

Colliers estimates the volume of sales in 2018 should range between $2 and $2.5 billion — representing a decline from recent years. Here are a few other highlights:

• Eastern Canada (defined as east of Manitoba) led the country for transaction activity with 36 trades totalling $558 million in volume.

• Quebec has overtaken Ontario as the top province for investment volume with the sale of several full-service properties including The Sheraton Centre Hotel, Marriott Château Champlain in Montreal and the Delta Quebec.

• Western Canada (defined as west of Ontario) saw rebounding sales activity with a nearly 80 per cent increase in the number of trades and more than 50 per cent increase in deal volume year-over-year, fuelled by higher activity in Alberta and the resumption of trading in Saskatchewan.

• Nearly 40 per cent 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

• Interestingly, private capital sources have been more active so far in 2018 with Real-Estate Companies (RECs) and Hotel-Investment Companies

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