With Q1 2013 Canadian hotel transaction volume ahead of the same period last year, and key fundamentals still favourable for the sector, it is anticipated year-end 2013 volume could reach $1.5 to $2.0 billion, particularly if what hits the market over the next month gets completed by year end, according to CBRE’s Canadian Hotel Investment Trends for Q1 2013.
The report indicates that Canadian hotel transaction volume reached approximately $415 million in Q1 2013, above first quarter results in 2012 ($384 million) and more than three times stronger than 2011 ($131 million). Of the 27 trades in Q1 2013, nine exceeded $100,000 per room, which almost matched the 10 trades over this threshold this time last year. Average per room pricing for the first quarter was reported at $121,000 in 2013, down from $147,000 in 2012 which was skewed by a number of trades with strong pricing, most notably the Four Seasons Toronto at $375,000 per room.
According to Real Capital Analytics, sales of U.S. hotels totaled US$5.6 billion in Q1 2013, up 54 per cent from the same period last year. Per room pricing was reported at US$118,000, down slightly from Q1 2012, a reflection of lower quality assets trading and geographic diversity rather than downward trending in pricing. Geographically, hotels transacted in all provinces during the first quarter except for P.E.I., New Brunswick and Saskatchewan. Ontario accounted just over half of total transaction volume, most of which occurred in the Greater Toronto Area and included the Hilton Toronto ($140.0 million), Metropolitan Hotel Toronto ($39.7 million), Quality Hotel Burlington ($9.8 million) and Holiday Inn Express Brampton ($8.1 million).
Looking specifically at the month of March 2013, Smith Travel Research’s results indicate national room demand increased by 0.4 per cent while supply grew by 0.7 per cent. Occupancy was down by 0.3 per cent and with ADR up by 1.7 per cent, RevPAR growth was reported at 1.4 per cent.