Category Archives: Hotels

Four Seasons penthouse sells for $28-million

Four Seasons Toronto

Luxury has a new price tag.

The 55th-floor penthouse of the new Four Seasons Hotel and Private Residences Toronto has been sold for $28-million, the highest price ever fetched for a Canadian condominium. The buyer – who made the company sign a non-disclosure agreement – is from out of the country.

Read the story in the Globe and Mail

At about $3,000 a square foot, the 9,038-square-foot penthouse is a relative bargain by international standards. In New York, for example, a comparable property would hit the market at $5,000 a square foot.

Four Seasons penthouse, not quite ready.

“There’s more demand than you would think for properties in this price range and the buyers come from all over the world,” said Michael Braun, a Vancouver-based agent at Rennie & Associates Realty. “You’re not talking about investors at this price – these are people who want a unique place to live.”

The previous national sales record was held by Vancouver’s Three Harbour Green, which sold for $22-million last year, or $2,300 per square foot.

The Four Seasons sale impressed even the most seasoned market watchers, although it is associated with one of the most luxurious hotel chains in the world. Isadore Sharp founded the company in Toronto in 1960, and expanded it into a global icon renowned for its customer service with more than 84 hotels in 34 countries.

Four Seasons penthouse, facing south.

Even so, $28-million is a lot of money for a condo, which comes with a 680-square-foot staff residence. But when it went on the market two years ago, the asking price was $30-million.

“For the same price as that penthouse, someone could buy an eight-storey office building in the city,” said George Carras, president of RealNet Canada, which tracks the condo market in several Canadian cities. “Or a 14-storey apartment building. Or, 63 average-priced condos.”

The sale isn’t likely to wreak havoc in the broader market, because the new owner is essentially buying an entire floor of a Four Seasons hotel. The owner, and all other residents, can use all of the hotel’s amenities, including room service and housekeeping. It all comes at a price: Condo fees are close to $7,000 a month.

Four Seasons penthouse, facing west.

The taller of the project’s two towers contains 253 hotel suites, with 100 condos built atop. There is a 110-unit condo next door, and 85 per cent of the units are sold despite prices starting at about $1.9-million for a 1,000-square-foot unit.

“The penthouse gets the press, but the nuts and bolts of success is actually selling the other inventory,” said Scott Woroch, executive vice-president of worldwide development for Four Seasons. “It’s a great vote of confidence in this project specifically and the global brand in general.”

Canada’s real estate market has attracted investors from around the world since the recession, as buyers look to invest in properties that will retain their value.

It’s estimated that as much as 60 per cent of new condo sales in Toronto are to investors who plan to rent them out. The average selling price is about $520 a square foot, according to data compiled by condo tracker Urbanation.

Four Seasons penthouse, facing, er, down.

Anyone disappointed that they didn’t get to buy atop the Four Seasons might consider the penthouse atop Vancouver’s Shaw Tower, which is on the market for $19.5-million.

They could also look down the road to the planned Aura development in Toronto by Canderel, which at 75-storeys will be the tallest in Canada. Its penthouse is on the market for $17.5-million.

“There are pockets of international buyers who are looking in Canada, and while this all sounds like a lot of money, to them this isn’t all that much,” said Riz Dhanji, a vice-president at Canderel. “Five years ago, these sorts of prices were incomprehensible. But now the buyers are out there and they are willing to pay.”

The most expensive home for sale in the country on, which is maintained by the Canadian Real Estate Association, is a $27-million, 41,000-square-foot mansion in Montreal.


Canada’s largest Holiday Inn opens in Toronto

King bed guest room at the Holiday Inn on Carlton Street.

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.

Another suite view from the Holiday Inn on Carlton Street in Toronto.

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.”



Canadian hotels attractive to foreign buyers

Investors in Canadian hotels have had one thing in common over the last decade – their nationality. In 92 per cent of accommodation property deals over the past 10 years, the buyers have been domestic.

Read the story in the Globe and Mail

Foreign buyers have preferred larger markets such as the United States. They have also favoured Asia, where economic growth has been outpacing that of North America.


Colliers International Hotels thinks the trend is about to change. As investors avoid deeply discounted properties in the U.S. over fears of protracted weakness, and begin to find overseas growth markets increasingly crowded, executive managing director Alam Pirani expects them to turn their attention to Canada.

“Foreign interest will grow over the next 12 months, with international buyers attracted to Canada’s enviable economic profile as a suitable environment to grow capital,” he said.

There have been $13.3-billion of sales in Canadian accommodation properties over the past decade, but the last few years have been quiet as owners were reluctant to place properties on the market in the midst of a recession that saw their buildings worth less and their rooms able to fetch fewer dollars per night.

But Mr. Pirani said a flood of properties could hit the market this year as owners look to capitalize on Canada’s reputation as a safe place to plunk capital

Foreign ownership will likely accelerate as quality, well located assets, along with a re-emergence of portfolio deals, are expected to be brought to market in Canada, he said.

What is the state of the hotel industry in Canada?
We’re starting to see positive growth, particularly in the three major markets of Toronto, Vancouver and Montreal. All for special event reasons, but still, there has been some positive growth. Supply is in check, which is key.

Why haven’t foreign investors been a bigger part of the Canadian hotel market?
It’s purely a function of good quality product. That isn’t to say it hasn’t been available in the past, but when you look at the times we had a lot of investment activity and there was capital available, it was at a time when markets were pretty ripe in the U.S. and internationally. Those opportunities looked great. But today, with Canada’s stability, there should be much more foreign investment. We are looking better by comparison.

You hear about Asian investors pouring into Canadian commercial properties, but in the case of hotels the opposite has been true. Why?
It’s true, Asian investors have been net sellers. For the most part it has been related to specific situations in their own country. The companies have been looking to repatriate their capital – frankly, they have had better opportunities at home in many cases. That is the underlying factor keeping Asian capital out of Canada and the U.S. – there have been much better opportunities back home. Hong Kong and Chinese money – the returns they get back home are significantly higher than they can get in North America. But now these groups are wanting to diversify their investments. That’s why I think you’ll start to see some of that capital trickle back in.

What effect does a high Canadian dollar have on foreign interest?
Historically it’s been one of the factors that brought a lot of U.S. investment into Canada. A strong dollar adds a layer of complexity.

But does it make Canadian hotels more or less attractive to foreign buyers?
Given where the dollar is today, it’s neutral. Historically a low dollar was a positive – it helped a lot of U.S. players come into the market. Now, I wouldn’t say it’s a negative. The economy is more stable – nobody is buying a Canadian hotel as a currency play. They’re willing to pay full value.

Who will the buyers be?
I think you’ll see foreign hotel investment companies in this market. I think there will also be private equity partnering with seasoned hotel investors, and you can never underestimate the private investors who tend to be significant players in this market.

Many of the hotels sold in the past year won’t be hotels a year from now. Owners want to knock them down and build something else. Will that continue?
That was an interesting development last year. That’s a natural evolution as things get older and the best use starts to be something else. I do think there will be a portion of assets that sell this year that will be used as something else – especially if there is new product coming into the market.

Wouldn’t building something rather than competing with other investors on a property make more sense?
There’s still a problem with the availability of credit. And while those credit markets are coming back, it’ll be a while longer before we see financing come back. You only see capital available for very specific projects.

Like the Ritz Carlton in Toronto, or other big name projects?
Right, and those projects only happen because of the mixed use component. If they didn’t have condominiums, it’d be tough to underwrite.