March 1, 2024


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Investors pouring money into hotels in Thompson-Okanagan – Kelowna News

Hotel real estate investors are moving ahead with plans to buy and develop properties as they anticipate more people travelling for leisure and for business.

With severe cases of COVID-19 on the decline, governments are removing travel restrictions and helping the hospitality sector recover from its biggest business decline in decades, if not ever.

Toward the end of the pandemic, there was a surge in investor interest to buy hotels in B.C., many in the Thompson-Okanagan.

Colliers International data show 39 B.C. hotel real estate transactions valued at more than $1 million in 2021. That is the highest number of those deals in at least a decade.

Some owners wanted to exit the sector because it was in such a deep downturn, while other investors could see foresee a sector rebound, according to Russell Beaudry, senior director for hotels at Colliers International.

“In the year preceding the global pandemic, hotel owners had little reason to sell, since operating performance was so robust,” he told Glacier Media.

Buyers for those hotels in 2021 spent about $453 million, which was the second-highest total in the past decade.

The only recent year investors spent more to buy hotels in B.C. was 2015, when buyers spent $759 million. That year was an anomaly because several large hotels – the Westin Bayshore, the Westin Grand and the Fairmont Hotel Vancouver – changed hands.

Beaudry expects heightened demand for hotel real estate to continue, and for developers to move ahead with building new supply.

The largest transaction in the Thompson-Okanagan last year saw the Comfort Inn in Kamloops sell for $10.9 million, or $125,000 per room, to Prestige Hotel and Resorts. Hotels and motels also changed hands in Penticton, Osoyoos, Merritt and Summerland (see full local list at bottom of story).

In addition to development companies working through the process to build new hotels, governments are buying hotels to convert into social housing, and investment companies are buying hotels to convert into condominium towers.

The B.C. government has bought hotels and converted them into social housing since at least the 1990s, but BC Housing was particularly active in 2021.

In Kamloops, it purchased the 40-room Fortune Motel for $3.6 million with plans to convert it into a supportive housing facility. In Vancouver, the Crown corporation spent $63.8 million for the Patricia Hotel at 403 Hastings St. E. and a nearby parking lot.

Developers have also been eyeing hotel sites for their redevelopment potential.

Capital (Canada) Trading Co. recently sold its iconic 1954-built City Centre Motor Hotel in Vancouver at 2111 Main St. to Nicola Wealth. No one at Nicola Wealth was available to confirm plans for the site, but real estate watchers expect the company to redevelop the site with condominiums.

“They do have a development plan – that’s for sure,” Beaudry said. “It won’t be a hotel.”

Meanwhile, other developers are pushing ahead with building brand-new hotels. In Kelowna, Westcorp is finally moving ahead with its downtown 33-storey hotel condo tower. Penticton will see a new hotel on the north end of the community near the Trade and Convention Centre.

Onni Group developed a 40-storey tower in Vancouver at 1335 Howe St. that boasts a 110-suite extended stay hotel known as Level Vancouver Downtown-Howe, which opened in February.

Onni has two other Level-branded hotels that have extended stay units: a 133-unit one at 1388 Richards St., and a 188-unit one at 1022 Seymour St.

Of those Seymour Street units, 20 are zoned to also allow nightly stays, and Onni is aiming to have the City of Vancouver rezone the entire property to allow single-night stays, according to Onni chief of staff Duncan Wlodarczak.

Onni also envisions building a new hotel next to the future Great Northern Way-Emily Carr station along the Broadway Subway, and Wlodarczak said his company is awaiting clarity from the city on guidelines for what exactly can be built on the site.

Hotel City Date Rooms Price Price per room
Bowmont Motel Penticton Mar-21 45 $4.4M $97,800
Richter Pass Motel Osoyoos Mar-21 48 $4.7M $97,900
Best Western Sunrise Osoyoos Apr-21 67 n/a n/a
Flamingo Motel Penticton Apr-21 25 $1.78M $71,200
Spanish Villa Resort Penticton Apr-21 69 $5.5M $79,700
Comfort Inn Kamloops May-21 87 $10.9M $125,300
Fortune Motel Kamloops Jun-21 40 $3.6M $90,000
Motel 6 Kamloops Jun-21 38 $3.1M $81,600
Westridge Motor Inn Osoyoos Jun-21 33 $2.7M $82,800
Quality Inn Merritt Oct-21 56 $1.55M $27,700
La Punta Norte Guest House Summerland Nov-21 6 $3.6M $600,000

The full Colliers national report can be viewed here.