Colliers International Hotels says Ottawa hospitality properties are set to increase in value by the largest magnitude in all of Canada.
Its annual hotel value index for Ottawa is set to increase by 6.7 per cent in 2012, compared to the national average of 4.4 per cent. Colliers bases its index on factors such as investor yield expectations, market performance, changes to the supply of and demand for hotel rooms as well as the overall economic health of a given market.
“The reason why Ottawa stands out - and has historically stood out - is because of the stability of the market,” said Alam Pirani, executive managing director of Colliers Hotels.
“Ottawa has always been highly sought after (by investors).”
He adds demand for local hotel rooms is increasing, thanks in large part to the reopening of the Ottawa Convention Centre in 2011. He says the new suburban hotels that have opened in recent years have been absorbed into the market as a result of this increasing demand.
While a new high-end hotel next to the Rideau Centre has been discussed for years, Mr. Pirani said most new downtown inventory growth will be in the form of mixed-use developments that combine hotel rooms and residential condominiums.
Last year, three local hotels changed ownership, all in September, according to Colliers. The 116-room Hotel Clarion Gatineau sold for $7.4 million, while the 88-room Monterey Inn Resort on Prince of Wales Drive traded for $4.3 million. The 12-room Inn on Somerset sold for $1.4 million.
Mr. Pirani said he doesn’t expect to see any increase in local hotel investment levels due to a lack of motivated sellers.
“When people buy in (Ottawa), they generally want to hold (the asset for the) long term,” he said.
“If something of significance came to the market, I think there would be a tremendous amount of interest.”