CBRE Hotels Canada is a supplier with a grand mission: to become the industry’s foremost provider of brokerage, finance, market research and valuation services. That may seem like a lofty goal for a team that is only three-and-a-half years in the making, but members of this elite group are as seasoned as they come.
While CBRE previously had a hotel practice, the Toronto-based group was re-established when Bill Stone, EVP, joined the fold. Today the team of senior professionals, some of who have worked together for years, includes Deborah Borotsik, VP; Mark Sparrow, director of Western Canada; Greg Kwong, regional managing director; Brian Flood, VP, Valuation and Consulting; and Luke Scheer, director of Eastern Canada.
Stone himself has been in the hospitality business for 25 years. He put his first stake in the ground with the sale of Toronto’s Windsor Arms hotel in 1989. Prior to joining CBRE Hotels, he spent 22 years with Colliers International hotel group and was previously a consultant with Toronto-based Laventhol & Horwath. During his career, he’s been involved in more than 250 Canadian hotel transactions valued in excess of $4.5 billion.
The revitalized team has already created an impressive track record, averaging 55 per cent of all brokered deals in Canada over the past two years. The company has increased revenue production by 158 per cent for the four-month period ending in April 2013, compared to 89 per cent for the same period the previous year. This year they’re on track to nearly double last year’s revenue threshold and are already exceeding year-end 2012 revenue by 14 per cent.
So, how does a relatively new entrant capture leading market share? There are many factors in CBRE’s favour. One is being part of a global practice with offices spanning the Americas, EMEA (Europe, Middle East and Africa) and Asia-Pacific regions, as well as eight decades of global experience. “We have access to 170 people like ourselves globally. That’s very important, because we can bring in a varied number of skill sets to mandates that require it. That also means we have the infrastructure and capital we need to help grow our group,” explains Stone.
While the firm’s accomplishments are many, there are some deals that stand out in the team’s mind. “The Sutton Place portfolio was an exceptional piece of business to be involved with, because it included four hotels that were taken to market in three overlapping tranches. Each hotel deal was closed within eight months of initial instructions,” says Borotsik. Toronto’s Sutton Place Hotel deal closed June 2012, while the Edmonton and Vancouver properties were sold together in June 2011; and the Chicago hotel deal was finalized in December 2011.
A point of pride was negotiating the sale of the Prince George Hotel in Halifax, Cambridge Suites Halifax and N.S.’s Cambridge Suites Sydney to Temple Hotels Inc., which closed in March. “This acquisition was a means for Temple to enter the eastern Canadian market with premium hotels that had a future upside,” Borotsik explains.
Another success was the sale of a partial interest in King Edward Hotels to Omni Hotels, which closed in August, Stone explains. “That involved a little more than our traditional services, because we had to negotiate purchase contracts and shareholders’ agreements. There were a lot of moving parts and stakeholders involved.”
The international scope of CBRE Hotels’ operations is an advantage in a world where international investors are increasingly turning their eyes to the Canadian hospitality market, says Steve Giblin, president and CEO of SilverBirch Hotels & Resorts in Vancouver. CBRE conducted four sales transactions for SilverBirch, including the Quality Hotel & Conference Centre in Grande Prairie, Alta., in March, and the Saskatoon Inn & Conference Centre in Saskatoon in November 2012. “Right now there is a lot of international interest in real estate in Canada. Many believe it’s a safe haven for real-estate investment and gives good cash returns. CBRE Hotels is able to attract the top entities in the world to come and bid,” adds Giblin.
What stands out in Giblin’s mind is the openness and transparency that CBRE Hotels offers. “I feel I am in a partnership with them and not just in a broker relationship. The team is honest and straightforward and very good at delivering good news and bad news equally. The latter is never the pleasant side of the business, but it’s important to be upfront and timely with that. I don’t have to worry about hearing the word from the street, because I know I will get it from them directly.”
Transparency and integrity is an important mantra for his team, Stone says. “When you ask us a question you will get a straight answer. It might not be what you want to hear, but it will be honest.” Honesty is engrained in the corporate governance of the entire company. “That is invaluable in our business,” adds Borotsik. “The expectations placed on us corporately, and the support, are very high.”
CBRE is equally committed to supporting the industry as a whole. In September 2012, it estab-lished the Canadian Hotel Financing Symposium, the first standalone lender session dedicated to the hotel industry. It is also a co-host and active participant of the annual Canadian Hotel Investment Conference (CHIC). Launched in 1997, CHIC has become a major hotel industry event that draws executives from North America together to share ideas and insights. CBRE has been involved in raising more than $1 million for hospitality-focused universities in Canada on behalf of CHIC. The firm also produces quarterly newsletters and annual reports that provide important market updates and industry insights.
Team members also do their part to promote education and support charitable causes. In 2012, contributions topped $180,000 and were dispersed to more than 80 organizations such as Big Brothers/Big Sisters of Canada, the Make-a-Wish Foundation, the Huntington Society of Canada, the Juvenile Diabetes Research Foundation and United Way.
With such dedication, it’s understandable that Stone expects CBRE Hotels’ success story to continue in the foreseeable future. “Industry prospects are very optimistic, and we expect to see [transaction] activity continuing well into the next year and pricing holding its own through 2014. We scaled up faster than anticipated, but it was at the ideal time.”
The company’s success to date is something that is never taken for granted. The team is equally committed to continuous learning and striving to be better. “We live and breathe the business of hotel real estate, and we take care to nurture our relationships. We know integrity, trust and confidence are what will distinguish us between success and failure. Clients hire us because they trust us,” Stone says.
photo by Margaret Mulligan