The Canadian Hospitality market has completed another year under the shadow of the COVID-19 pandemic. Throughout the year, the hospitality industry was tested, but some optimistic trends were observed as year-end approached. Government support programs have provided relief to hoteliers that have been struggling through these trying times. Hotel transaction sales volume in Canada’s six major markets totaled approximately $712 million in 2021 – up 124% compared with 2020, and the highest annual result since $726 million in assets changed hands in 2018.
There are a variety of reasons for this bump in transaction velocity, such as some investors using capital that had been allocated for 2020 but was not spent, lenders being proactive on non-performing assets which needed to be liquidated, and continued change-of-use opportunities. A large volume of smaller assets was sold across the country (there were 92 trades in 2021 compared with 75 in 2018, reflecting averages of $7.7 million and $9.6 million per trade, respectively).
Toronto (GTHA) and Calgary were the most active markets, accounting for 66% of 2021 sales volume. The largest hospitality transaction of 2021 by sale price in these 6 major markets was the sale of the QUBE Hotel in downtown Toronto’s entertainment district for $74 million. Purchased by Northland Properties, the 120-room hotel sold for approximately $617,000 per room. Another notable sale which occurred near the end of 2021 was that of the Courtyard & Residence Inn by Marriott Montreal Airport, which was purchased by Knightstone Capital Management for $69.6 million. Although outside of the major market areas covered in this report, one of the most notable resort transactions of 2021 was the acquisition of a portfolio of Ontario resort properties (including Deerhurst Resort, Horseshoe Resort, and the remaining development lands at Blue Mountain Resort) by Freed Hotels & Resorts from Skyline Developments for $330 million. These significant hospitality transactions demonstrate keen investor interest in the marketplace.
Annual hotel investment sales volume by market
2021 hotel investment sales volume by market
A positive sign
Monthly occupancy levels in Canada showed significant growth in 2021 compared with the struggles of 2020 – still not in line with 2019, but a positive sign of what lies ahead. In August 2021, the national occupancy level reached 65.6% – the highest since October 2019. At $106.22, August also represented the highest RevPAR since October 2019.
National occupancy rate 2019-2021
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Curtis Gallagher* Principal, Canadian Hospitality Lead +1 416.673.4018 firstname.lastname@example.org
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© 2022 Avison Young Commercial Real Estate Services, LP, Brokerage. All rights reserved. E. & O.E.: Some of the data in this report has been gathered from third-party sources and has not been independently verified by Avison Young. Avison Young makes no warranties or representations as to the completeness or accuracy thereof. Investment sales and hotel market data sourced from Avison Young, Altus Data Studio and STR.