Glowing review for hotels
Winnipeg's some of best performers across Canada
By: Murray McNeill
WINNIPEG has one of the best performing hotel sectors in the country, according to a new industry report issued Wednesday.
Colliers International says in its 2008 hotels report that Winnipeg had the second biggest increase in hotel valuations in 2008, at 3.3 per cent, and is forecast to have the second biggest increase in 2009, at 2.3 per cent.
The only market to boast better numbers is Regina/Saskatoon, with an increase of 6.2 per cent last year and a projected gain of 3.5 per cent this year.
Hotel values are based on a combination of factors, including the operating performance of a market, industry trends, and the return expectations of investors.
Alam Pirani, executive managing director with Colliers International Hotels, said operating performance takes into account things like revenue growth, and Winnipeg's hotel sector rang up revenue growth of 9.5 per cent in 2009. That was second only to Saskatoon's 16 per cent.
"Winnipeg has had a good run -- six consecutive years of growth (in hotel values)," Pirani said. "And that (9.5 per cent growth in revenues) is a great number."
He attributed the strong growth to a combination of factors, including a strong local economy, which tends to lead to more business and leisure travel.
Winnipeg also has a relatively stable hotel market that isn't plagued by an oversupply of rooms, which drives down both occupancy rates and room rates, Pirani said.
The chairman of the Manitoba's largest hotel chain -- Canad Inns -- confirmed in an interview this week that it's posting some strong numbers in spite of the economic downtown in Canada.
"We haven't taken a hit yet," Leo Ledohowski said.
He said the chain's revenues in January were "way above" those for January 2008. February's were on par with a year earlier, and "March looks like we're on track to match last year's March," he said.
He also attributed it in part to the relative strength of the Manitoba economy, as well as in North Dakota, where Canad Inns also has a hotel.
The Colliers report also examined the average value per room in each regional hotel market in Canada. That figure is based on the dollar value of hotel transactions in each region in 2008, and Manitoba's price per room last year increased by 3.8 per cent to $83,700 in 2008. That was the fourth highest average among the seven regions covered in the report.
However, Parani noted the Manitoba figure is based on only one hotel transaction in 2008 -- the sale of the 263 room Radison Hotel Winnipeg Downtown for $22 million.
With only one transaction for the entire year, "it (the 3.8 per cent increase) is not a good indicator" of the state of the hotel valuations here, he said.
The Colliers report said the Canadian hotel industry saw $1.1 billion in sales of existing operations last year, down 77 per cent from a year earlier.
This worked out to $116,500 per room, a decline of 25 per cent from 2007.
Bill Stone, Colliers' executive managing director, said the overall reduction reflected diminishing credit availability and the fact the economy took a sharp turn for the worse in 2008.
"Certainly for the first half -- almost seven months -- of (2008), activity remained strong, and then there was a pullback," Stone said. "So I think we really felt the effects of what's been happening globally."
That said, Stone said there's been renewed interest from potential buyers in recent weeks. He attributed this partially to new assets becoming available as some owners have large amounts of debt or expensive renovation projects coming due.
-- With files from Canwest News Service
murray.mcneill@freepres.mb.ca
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