Canada’s hotel market has had a strong run in recent years, boosted by a booming economy and a weak currency that’s attracted domestic and foreign travelers, particularly to cities such as Toronto, said Jeff Hyslop, senior vice president of asset management at Toronto-based InnVest.
That’s made the market “frothy” so it’s prudent to diversify into the U.S., particularly with trade tensions also hanging over Canada, he said.
“We’ll be cautious in our first foray into the U.S. to make sure it’s the right market, right asset, right partner,” Hyslop said in interview at Bloomberg’s Toronto bureau, declining to say how much the company might spend.
InnVest, owned by Hong Kong-backed Bluesky Hotels and Resorts Inc., is interested in markets including Seattle, Boston and Chicago, Hyslop said, adding New York and San Francisco are too expensive.
InnVest is following several Canadian real estate firms to the U.S., including Tricon Capital Group Inc. and the real estate arm of insurer Great-West Lifeco Inc. as prices have ratcheted higher at home. CBRE Group Inc. said in March that the value of Canadian transactions are likely to slip in 2018 from near-records in the previous two years with fewer large-scale deals expected.
InnVest has 80 hotels in Canada with more than 11,000 rooms operated by international brands including Marriott, Comfort Inn, Fairmont and Holiday Inn. It also owns 50 percent of Choice Hotels Canada Inc. The former Trump International Hotel & Tower will be rebranded the St. Regis.
InnVest has also invested about C$18 million ($14 million) in the redevelopment of a former Holiday Inn site on Bloor Street to the Kimpton Saint George brand and may add more boutique brands and perhaps a resort.
InnVest projects about C$80 million in capital expenditures this year. It will focus on maximizing its portfolio and off-loading properties that don’t add as much value, Hyslop said. It plans exterior renovations of its Comfort Inn buildings in future years, of which it owns 53.
It’s also eyeing further acquisitions in Canada. “Nothing is imminent at this point but we’re always looking out for various opportunities in the market,” Hyslop said.
The hotel chain is seeking to ramp up the use of technology in its hotels, from house-keeping robots that deliver toothpaste to cell-phone room access. The need to innovate and create better customer experience is partly driven by pressure from companies such as Airbnb Inc., Hyslop said.
“The demand has been strong in Canada so we haven’t seen a huge impact from an occupancy perspective directly from Airbnb,” he said. “But when markets soften a bit, you do see that Airbnb is definitely something that we need to be cautious about.”
©2018 Bloomberg L.P.