Wednesday 18 December 2019

Current Realities Impacting Hotel and Motel Transactions in Fall 2019

Canmore, Banff, Jasper and other holiday destinations have done as well as ever this year. Read about The Malcolm, the brand new luxury hotel in Canmore after this quick update on the Other Side of This Challenging Hotel Market.

I have just brokered a transaction in Saskatchewan for a $12 million property that sold for $4.175 million.

Why? The relatively new property located in a decent sized smaller town was hit by the oil and gas downturn with the subsequent reduced occupancy and rack rate all of which of course dramatically reduced the ADR and RevPAR. In short, the capitalized value was savaged.

Recent Hotel Sales
My associate and I transacted a total of 5 hotels and motels in 2019 which is a marked increase over 2018.

One was sold for a planned change of use but will still operate as a smaller town motel until the new owner is able to get his project in place. One was an operating property under receivership but it still captured a value close to what the owner wanted. Most encouraging, one was purchased on the basis as noted below. It made sense to the buyer and the seller was prepared to meet the market as it now exists.

This speaks to what seems to be the new attitude of purchasers and owners which recognizes economic realities.
Purchasers – “If this is the new normal, I am going to seek out opportunities that make sense in this economy and I am going to run a successful hotel or motel.”
Owners – “If this is the new normal, I am prepared to set my price at today’s value to secure a successful sale of my property.”
On the other side of the market, here’s an encouraging report from spending an evening with the Rockies SKAL club and then overnighting at the New Malcolm Hotel in Canmore, Alberta.