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Hotel property sales soared to $335 million in Q1 2023

Property transactions up 70 per cent from a year ago, with B.C., Alberta resorts among top targets
The 176-room Best Western Plus Kelowna Hotel recently sold for $41.5 million, or more than $235,000 per key. | Colliers

Spurred by an increase in room revenues and potential for a rise in international visitors, buyers have pushed sales of hotel assets up 70 per cent to $335 million in the first three months of this year, compared to the first quarter of 2022.

“The travel industry remains in solid recovery mode. As we enter the busy summer season in Canada, hoteliers are anticipating a robust operating environment with many reaping record top-line revenues,” according to Colliers hotel division, which released an industry update May 18.

The update showed that revenue per available room (RevPar), a key hotel market metric, was up 18.9 per cent in the first quarter of 2023, to $100, compared to the same period in pre-pandemic 2019.

Also, Statistics Canada data shows that 2022 saw 12.8 million overnight international arrivals, up from just 1.5 million annually in 2020-21 at the peak of the COVID-19 pandemic.

Despite the surge, international arrivals are down 42 per cent from 2019 levels, but the recent end of travel restrictions are expected to boost visitors to Canada.

“The last remaining Covid restrictions have been lifted, including the U.S. dropping a requirement for proof of vaccination for entry by air effective May 11, 2023, and WHO [World Health Organization] ending its global health emergency status effective early May 2023 after more than three years,” Colliers noted.

Based on the strong performance of first-quarter sales, with a total dollar volume of $335 million, Colliers is forecasting hotel property sales could reach $2 billion in 2023.

While Ontario and Quebec dominated Q1 2023 hotel sales, there were also some notable deals in B.C. and Alberta.

This includes the 235-room Wyndham Edmonton Hotel & Conference Centre, Edmonton, which sold February 23 for $12 million. The 99-room Holiday Inn, Canmore, Alberta sold in January and the 36-room Hotel Penticton, Penticton, B.C. sold in March, but sale prices on these assets were not released.

In May, the 176-room Best Western Plus Kelowna Hotel, Kelowna, B.C., sold for $41.5 million to Mundi Hotel Enterprises Inc., in a deal brokered by Colliers’ Vancouver office.

This sale pencilled to more than $235,000 per key, much higher than the national average of $150,000 per key achieved in the first quarter 2023.