Steve Ladurantaye

The largest Holiday Inn in Canada has quietly opened for business on Carlton Street, as the hotel chain bets that upscale amenities at a lower price will woo tourists away from the slate of luxury hotels that have been added to the city’s stable.

The hotel – which was formerly a Days Inn and has undergone $20-million of renovations – has 514 rooms on 23 floors. The lobby features marble floors and hip furniture, the staff wear crisp black uniforms and a custom fragrance is pumped through the halls.

Read the story in the Globe and Mail

It’s a long way from the basic lobbies of days past, and more in line with the $1-billion re-branding initiative Holiday Inn launched in 2008 to move away from what its management called “a dangerous middle ground” in which investors were still seeing good returns but travellers were beginning to seek hipper lodgings.

“As generations grow up, their preferences change and we need to keep up with the times,” said Gopal Rao, regional vice-president of the Holiday Inn’s parent company IHG Canada. “It’s not so much about fixing something that is broken as keeping things current.”

The hotel did a soft opening earlier this month, and will officially open April 6. It’s the largest Holiday Inn to open in Canada or the United States in 2011.

With more than a thousand luxury hotel rooms being added to the Toronto market this year and next, the chain felt the way to compete was to offer the same amenities – a spa, several restaurants and staff well trained in customer service – as their world-renowned competitors.

“We call that amenity creep in this business,” said Alam Pirani, executive managing director of Colliers International Hotels. “It gets to the point where every hotel has a flat-screen television.”

The Thompson Hotel and the Ritz-Carlton have opened in the past year, and Shangri-La, Four Seasons and Trump all plan to open within the next 12 months. Combined, they add about 1,000 luxury suites to the city’s inventory.

While luxury rooms tend to start at $400 a night, the Holiday Inn charges closer to $175.

“We realized the Holiday Inn had to be more than just a hotel stay, it had to be an experience,” Mr. Gopal said. “The re-launch wasn’t any one item – it started with customer service and ended with a focus on making sure the amenities were what the guests expected, right down to a menu of pillows.”

The slew of hotel openings come as the industry bounces back from one of the biggest slumps it has ever seen. Revenue per available room, a key measure of the sector’s financial health, plunged 12 per cent through the recession. That number is somewhat flattering because many chains kept room rates stable, but offered free nights and other upgrades to attract guests.

PKF Canada, a market research firm, estimated that profitability at the nation’s hotels declined by 33 per cent in 2009. The occupancy rate in downtown Toronto hotels was 68 per cent in 2009, with average rates at about $145 a night.

Occupancy rebounded 8.8 percentage points last year to more than 76 per cent, with rates hitting $157.38, and appear to be moving higher this year as well, according to Bill Stone, executive vice-president of CB Richard Ellis Hotels.

“I think we’re at the point in the recovery in this market place that we can see substantial growth in occupancy and rates,” he said. “With that will come a number of hotels that will look to reposition themselves, and that makes for a more competitive market.”

While not everyone can afford to pay the rates a luxury chain commands, Four Seasons Hotels Inc. chairman Isadore Sharp said any hotel that doesn’t make an effort to modernize will find itself hard pressed to stay in business as travellers find the extra money to stay in nicer accommodations.

“When people come to Toronto, they are going to have a very good choice of accommodations,” said Mr. Sharp, who started the global chain of luxury hotels in 1961 with a Jarvis Street development. “All of the hotels are changing, others will probably go out of business. This is all about upgrades – what was good before doesn’t necessarily work today.”

 

 

While there’s more to a city’s real estate market than its trophy properties, Jones Lang Lasalle figures it’s the skyline that captivates interest. That’s why the commercial real estate brokerage compiled its first North American Skyline Review.

Read the story in the Globe and Mail

The report focuses on downtown properties that make up the highest profile areas in 21 cities, including Toronto and Montreal. Criteria for each is different – in Toronto, bank towers are the focus, for example, while in Boston it’s buildings higher than 18 storeys built after 1980. The intention is to give a general idea of how marquee districts in each city compare to each other.

In most cities in the report, rents fell by about 2 per cent in 2010. But Jones Lang said the majority of rents are close to hitting bottom, if they haven’t already. And, as the top space in each city refills with tenants, rents are likely to move higher, it says.

“Due to space limits in this segment of the market, we will see rent growth in the near term and potentially rent spikes over the next 24 months as new construction could be the only viable alternative for larger tenants in some of these markets,” said John Sikaitis, senior vice-president of research for Jones Lang.

There aren’t comparable studies into specific downtown markets, but Canadian experts note tenants have taken opportunities created by the recession to occupy marquee buildings that they may not have afforded before the downturn. “Tenants are gravitating toward better-quality buildings,” said Avison Young principal Bruce Cowper.

The office space covered in the Jones Lang study accounts for only about 30 per cent of everything available, but because it is the best real estate in each city it “leads market recoveries and downturns with respect to both the investment and leasing side.”

Notably, there were fewer transactions in the Canadian cities, as better financed landlords faced less pressure to sell through the recession. (Two of the measures here – average tenants improvement allowance and average free rent – are concessions offered to woo tenants.)

Toronto
Where: Bank towers with asking rents above $25 a square foot net.

Total vacancy: 12.7 per cent

Space leased/vacated in 2010: 994,732 square feet

Average asking rent: $62.13

Average tenant improvement (TI) allowance: $28 a square foot

Average free rent (months): 6

Transactions (2005-2010): 1

Quote: “The effect of the Pan-American Games will become a serious consideration for construction and leasing demand over the next four years.”

Chicago

Where: Properties larger than 750,000 square feet, built or renovated since 1985

Total vacancy: 16.3 per cent

Space leased/vacated in 2010: -156,285 square feet

Average asking rent: $35.33 a square foot

Average TI allowance: $50 a square foot

Average free rent (months): 10

Transactions (2005-2010): 40

Quote: “Continuing the trend from 2010, activity will include a variety of relocations, renewals and subleases, but overall shifts in size, positive or negative, should average out.”

Montreal

Where: Downtown buildings with more than 200,000 square feet, asking rent above $20 a square foot net.

Total vacancy: 11.3 per cent

Space leased/vacated in 2010: 63,959 square feet.

Average asking rent: $43.69

Average TI allowance: $25 a square foot

Average free rent (months): 0

Transactions (2005-2010): 3

Quote: “The outlook for 2011 looks bullish from the landlord perspective, with some caution applied to just how much net rents will increase over the next 12 months.”

Boston

Where: Properties built after 1980, higher than 18 storeys or at least 200,000 square feet

Total vacancy: 16.4 per cent

Space leased/vacated in 2010: 532,645 square feet

Average asking rent: $44.77 a square foot

Average TI allowance: $42.32 a square foot

Average free rent (months): 6.3

Transactions (2005-2010): 36

Quote: “A notable trend has emerged in 2010, as high-rise tower availability, defined as space higher than the 16th floor, began its descent from its cyclical high total vacancy, opening a five-percentage-point gap between it and the low-rise tower market.”

New York

Where: Premier buildings in Manhattan that “truly move the market.”

Total vacancy: 10.5 per cent

Space leased/vacated in 2010: 1,107,515 square feet

Average asking rent: $68.09 a square foot

Average TI allowance: $62.86 a square foot

Average free rent (months): 5.9

Transactions (2005-2010): 67

Quote: “With low-risk investments barely keeping pace with inflation, investors are lining up to invest in New York City real estate. The velocity of recovery in New York City outpaces the global and U.S. markets.”

San Francisco

Where: Properties built or significantly renovated since 1985

Total vacancy: 15 per cent

Space leased/vacated in 2010: -433,664 square feet

Average asking rent: $43.63 a square foot

Average TI allowance: $45 a square foot

Average free rent (months): 4

Transactions (2005-2010): 37

Quote: “While leasing fundamentals have plenty improvement ahead, the next two years promise to bring a new vitality and higher values to the market.”

The Old Woman Who Lives In A Shoe had so many children, she didn’t know what to do – so she called a real estate agent to help her find a new place to live.

The Canadian Real Estate Association is relying on humour in its latest advertising campaign, opting to conscript a fairy tale character to its cause rather than hammer consumers with another set of television spots earnestly espousing the benefits of real estate agents.

Read the story at the Globe and Mail

The ads come as the industry enters its critical spring market, a time when the majority of homes in Canada are usually bought and sold. This spring, however, the country’s 100,000 professional agents are facing new threats to their business because of a deal with the Competition Bureau that has made it easier for homeowners to conduct their own sales.

In previous years, sellers needed to hire an agent to handle the whole sale process if they wanted a listing on the Multiple Listing Service, which is owned by CREA and is the main source of home sales in Canada. After the October settlement with the bureau, a seller can now have her house listed by an agent for a fee and then handle the rest of the sale themselves. For-sale-by-owner companies such as Property Guys and Grapevine have sprung up to offer assistance to home sellers who want to save money on fees.

The stakes are high: Sellers paid billions of dollars in commissions to agents last year. There were 447,010 sales on the MLS system in 2010, at an average price of $339,030. Commission rates tend to hover around 5 per cent, which implies nearly $9-billion in real estate commissions paid last year, though each agent is able to charge whatever she can command, and many consumers try to negotiate a lower rate.

There are signs that the spring season could be slower than has been seen in the past two years, as many first-time buyers have already made their move and the threat of higher interest rates – coupled with Ottawa’s elimination of 35-year insured mortgages – keeps marginal buyers out of the market.

CREA’s fall campaign focused on how agents help their clients through the sale process. The new campaign is intended to be light hearted, while still pushing the message that real estate agents provide value in a transaction.

“My old house was a little bit small, but here, lots of space,” The Old Woman Who Lives In A Shoe says in a thick accent. “My realtor a-listened to a-whatta was important to me – like schools in the area – and then he found us this place. I love it here, and so do my kids.”

Viewers are then encouraged to go online to howrealtorshelp.ca to watch a series of spots featuring the experiences of those who have bought and sold their home with the help of agents. There’s Amy and Thom, who needed to bid quickly for their dream home. Chris and Philana “tried to play the property game by themselves … [but] finally decided to enlist the help of a realtor.”

“I like their use of comedy, especially considering they are up against what has essentially been a public relations disaster over the last year,” said John Andrew, a professor at Queen’s University who specializes in real estate.

“That said, I’m not sure anyone will have any clue what the commercial is about unless they follow the Web link. I have young kids, and even I haven’t heard that nursery rhyme referenced in the last 40 years.”

CREA has launched seasonal ad campaigns twice a year since 2006, one in the fall and one in the spring. The intent of this campaign – which was put together by agency CP+B Canada – was to show how agents can help buyers and sellers through a transaction.

“We try to talk about the unique needs of consumers with a consumer-focused ad,” said Randall McCauley, CREA’s vice-president of public and government relations. “The idea is to put them in the centre of an equation – whatever their needs, there is a realtor who can meet those needs.”

NOTE: I can’t get a Youtube link to the commercial yet, but it can be found here. Meanwhile, here are a few of their other commercials.

When Isadore Sharp opened his first Four Seasons Hotel in a seedy Toronto neighbourhood, all he wanted to do was make a decent buck off a real estate deal before moving on to the next project.

Fifty years later, he has built one of the most recognized brands in the world. He did it by a strict adherence to what he called the golden rule: “The simple idea that if you treat people well, the way you would like to be treated, they will do the same.”

Read the story and comments in the Globe and Mail

He’s no longer running the company – he relinquished the chief executive officer title to Kathleen Taylor in 2010. But he continues to serve as chairman of Four Seasons Hotels Inc., is actively involved in promoting the company’s brand and values around the world and has a say in all of its major moves.

The company – which was taken private in 2007 in a $4-billion deal backed by Bill Gates and Saudi Prince al-Waleed bin Talal that left Mr. Sharp with a 5-per-cent stake – will mark its 50th anniversary today with a modest celebration in Toronto and the launch of a website showcasing the company’s social responsibility initiatives.

A grander party was planned, but executives felt it was inappropriate following the disaster in Japan. Mr. Sharp spoke recently about the company’s legacy and future.

What has been the key to Four Seasons’ longevity?

I think our approach to the business struck the right note and continues to do so. The idea of trying to figure out what would be of value to the customer has stayed in place – we’re constantly looking for the refinements we should be making that would add value to the customer.

What was hotel culture like in 1961?

The major hotels were railroad hotels – they were about convenience when travellers got to town and they had different standards. They were the grand old hotels with magnificent halls, and the physical presence of the buildings gave them their image. I looked at it very differently, I didn’t think buildings could sustain your position because new buildings will always come along. So we looked at it from the service point of view.

What’s been the biggest change?

The accommodations have been dramatically improved. You would sleep, wash and then go out. But today, the hotel is used as an office. The bathrooms are much more comfortable. The space is better. But the biggest change has been in the technology, and how it gives us access to a database – knowing more about our customer has been the biggest change and it has a major impact on sales strategies.

Were there phones in each room at your first hotel?

We had phones, but they were single lines. We were one of the first to put a second phone in the bathroom.

I’ve always found the toilet phone baffling.

Well, it used to be pretty hard to rush to get to the telephone. There was no answering service then, nobody could leave a voicemail. So we dealt with the situation and installed phones [beside the toilets].

How have you adjusted to a more secondary role?

It’s something you don’t do overnight, we prepared over a long period of time. I still retain responsibility for what I’ve always done – I’m still in charge of the development concepts and the aesthetics of the company.

What state is the hotel industry in right now?

A recovery is taking place. Of course the problems in the Middle East and what’s happening in Japan will clearly change the results that we were expecting to come from those countries. But in the long term, especially in the Middle East, what is happening will be a benefit for everybody. Businesses will start going back there looking for opportunities.

What role does a multinational corporation have to play in times of unrest or disaster?

We try to assist where we can. An example is Egypt: We have four hotels there. Part of each employee’s salary comes from the service charge on the guests. Well, business has dropped off a cliff. The salaries have reduced substantially. But our owners there recognize the importance of the employees, so they are trying to make up part of that lost income. We also try to move people out from there, move them to other hotels. That keeps down the cost at the hotel, and helps the employees.

Using the last 50 years as a gauge, is 2011 a good time to be a hotelier?

We’ve gone through problems, but it’s a growth industry. It’s a global market – the demographics of the part of the world that was at one point considered undeveloped – China, India, Asia, Latin America – are all part of our economy now. That’s a huge force coming into the commercial world and hotels make up an important part of that. This industry is rock solid.

 

 

So, you made your big entrance about a year ago with an open letter to the city that some people felt was arrogant. How are you feeling about Toronto now?

Look, I have to tell you, I love this town – I wouldn’t have opened if I didn’t. What I’ve learned is people embrace good food. There’s a discerning palate here. And I think the people from here are going to Miami and New York and finding us, that’s what I wanted all along. That was my intention.

Read the Scott Conant Q&A and comments in The Globe and Mail

You think people from Toronto are actively seeking out your restaurants elsewhere?

It happens all the time.Let’s hope we’re doing something that’s recognizable when people leave their own city, that’s all I’m saying.

How much time do you actually spend here?

This project was a little late, and I had openings in Las Vegas and Los Angeles that I was doing as well. So, I had to sneak out and I’ve been travelling a lot. The time I spend in each city is fluid, but I do spend time in all the cities. I can’t carve out time a certain way – I’m in Toronto now, I’ll go on vacation for 10 days, then back here again for five days.

How do you maintain quality in Toronto if you’re not around a lot?

We schedule conference calls all the time, we BBM each other. We’re in constant contact. You need to let people do their jobs.

Your Twitter bio points out that you are “not a douche.” Why do you need to tell people that?

On 24-Hour Restaurant Battle, they really make me look like a nice guy. But as nice as I look on that show, I come across as mean and kind of douchey on Chopped. Honesty is funny; sometimes it stings. The key is always just to be fair and constructive. That said, editing is a hell of a thing. I read what people write on Twitter. I just retweeted a guy who asked where I studied my perfect “dickhead personality.” I found it funny – sometimes you can just laugh and embrace that public persona.

Does it terrify the staff when you wander in and spend time in the kitchen?

I’m not that guy – I’ve worked with people in the past who led by fear. That doesn’t make anything better. I’m a motivator. I walk around patting people on the back all the time and asking questions. Nobody knows how a place functions better than the staff. I’m a big advocate of people showing their personalities on the floor in the dining situation with the customers. As long as it doesn’t go too far – patting [a customer] on the back is a little too much.

What do you look for in a restaurant?

There are a lot of moving parts. But cleanliness goes without saying.

What’s a deal breaker?

Always bad service. How many times have we all been to restaurants where food is spectacular but the service is bad? There’s never an excuse to be rude to a customer. The absolute worst is to show a customer you don’t care. They look up at the wait person and they are looking at a blank face. Forget it, that’s unforgivable. What we do is simple stuff – just make people happy.

Do your friends hate going to dinner with you?

I have one friend who always wants to go to a place called Chirping Chicken in New York – it’s the kind of place where you go and grab a tray and eat your chicken in the corner. I love the chicken and I’ll order it in, but there’s no way I’m going in there.

So do you have them to your place to eat instead?

No, I take them to the restaurant.

Where do you eat when you’re here?

I love Buca – I think it’s awesome. Terroni is really good, it’s a fun place. And there’s this place called Reggie’s, a sandwich spot that is open 24 hours. I’ve done a lot of late-night runs there.

What have you eaten so far today?

I’m a “cup of coffee, triple-espresso and out the door” kind of guy usually. Today, I woke up and went to a Good Morning America shoot. I did a tasting of diet foods, pre-prepared and packaged. That’s a bad way to start. After that I went to the airport and had some watermelon and a tuna-fish sandwich.

What’s the one thing everyone should know how to cook, but usually screws up?

Scrambled eggs. You need a medium-hot pan – olive oil or butter. Wooden spoon. Throw in the eggs that are already whisked and use very small circles to stir. Don’t overcook. I also use one of those immersion blenders to create a nice froth and aerate it a touch.

This interview has been edited and condensed.