Colliers Hotels Canadian Hotel Investment Report

TORONTOColliers Hotels has released the 28th edition of the Canadian Hotel Investment Report. The report provides an in-depth look at 2022 transaction activity and insights on the road to recovery for the Canadian lodging industry. Furthermore, the report provides an outlook for the hotel-investment market in 2023.

The 2022 key takeaways are:

  • Year-end volume reached just over $1.6 billion in 2022, down approximately 20 per cent year-over-year (YOY), and acquisitions for ongoing hotel use trended 10 per cent above 2021 levels to $1.3 billion.
  • Hotel operating fundamentals recovered years ahead of expectations in 2022 with national RevPAR ending this year 3.5 per cent ahead of 2019 results, according to STR.
  • Average price per room metrics, including all types of lodging transactions was $132,500 in 2022 compared with $158,100 last year. Excluding alternate-use deals, average price per room metrics remained healthy at $120,800.
  • Hotel transaction activity related to alternate uses comprised just 20 per cent of overall activity in 2022, compared with 41 per cent in 2021 and 53 per cent in 2020.
  • Canada’s largest urban markets saw 35 hotels transact for some $640 million during the year, representing 40 per cent of national volume.
  • Private investors and hotel-investment companies continued to be the largest buyers of hotel assets, investing more than $1 billion during the year (65 per cent of total).
  • Distressed sales remained at historic lows in 2022, representing just one per cent of sales volume over a handful of small trades.
  • Trades under $10 million continued to attract investors looking to place capital with a small cheque size and accounted for almost 75 per cent of deals during the year.

Additionally, the key themes to watch for in 2023 are:

  • Continued strength in the transaction market, with an anticipated volume of $1.5 to 2 billion.
  • The transaction market will be primarily led by strong activity in secondary and tertiary markets with deals under $20 million. There’s also potential for several headliner city centre hotels and resorts to transact.
  • Creative structuring during this interim high interest-rate period.
  • Portfolio reviews, loan maturities and overdue Property Improvement Plans (PIPs) will prompt owners to bring assets to market.
  • Increased focus from developers on building lifestyle and extended-stay product, given gaps in the market for this product type with strong demand and return potential.

To read the full report, click here.


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