Hotel Equities plans to double hotels in Canada

ATLANTA, Ga. — Hotel Equities has pushed the pause button on hotel projects that haven’t gone in the ground, but has maintained momentum on management agreements and on projects that were under construction at the start of COVID-19. The company currently has 26 or 27 properties in Canada, and still plans to double that in the next two years, Joe Reardon, chief development officer told CLN.

“Our strategy is putting money in where the capital markets are, for projects that need to be finished up or fixed,” he said. Hotel Equities has a “nice little pipeline” in Canada, with all of the coming growth in the Eastern half of the country. Projects underway include a dual-branded Courtyard by Marriott and Residence Inn by Marriott in Langley, B.C.; Fairfield by Marriott hotels in Bowmanville and Ajax, Ont.; a Four Points by Sheraton in Campbell River, B.C.; and a soon- to be-announced Marriott Hotel in the design and development stage.

“We just opened up Fairfield Edmonton Airport,” he added. “Our Marriotts in Alberta, from Medicine Hat to Edmonton, south and north, have really good numbers. Hotel Equities’ Marriott portfolio in Canada is performing at an average RevPAR index of 182.6. Our Hilton is at 114 per cent. Our 10 to 12 IHG properties are at 125 per cent. Overall, that puts us at 112 per cent, up 5.4 per cent over our comp set.”

Hotel Equities has had success with its extended stay hotels, which have done well during the pandemic. “Our teams made sure everyone felt safe,” Reardon said. Out of about 140 hotels in Canada and the U.S., the only hotel Hotel Equities property shut down during the pandemic was one in Florida, and that was because the municipality required it. That hotel is now open for business and is doing very well. None of Hotel Equities’ Canadian properties closed.

Brad Rahinsky, president and CEO added that while full service properties in larger urban markets have struggled, extended stay and regional markets, where there is more leisure and transient business, have had better recovery. “In secondary and tertiary markets, we are seeing some green shoots and signs that consumer confidence is coming back. In Canada, markets like Kelowna, Canmore and the B.C. wine country are making a nice resurgence.

“In April, we found the bottom and it was as deep an abyss as anyone has experienced. We have seen some nice traction and momentum since April, and have had the eighth consecutive week of gains — although those are off a rock bottom floor. We feel good — it’s not fast enough and it’s not across the board, but we like the pace and projects we see over the next 90 days.”

As Bryan DeCort, executive vice-president, put it: “April was abysmal; May was less abysmal; and June will be better. We’re a far cry from where we were hoping we would be.”

Here in Canada, Hotel Equities had to make sure they understood the wage subsidies and the guidelines, said DeCort. “We leveraged [federal] government and provincial programs. We worked with our brand partners, such as Marriott and IHG, and had weekly touch points with them, making sure we were in lock-step with them.”

Reardon attributes Hotel Equities’ Canadian success to their Canadian team based in Edmonton and Calgary with a couple of people in Toronto. “When we came to Canada two- and a-half years ago, we set up a regional Canadian office. A lot of people don’t have that, but we made a massive commitment to [having one]. We are very close to hiring a vice-president of operations for Canada,” he noted.

Said DeCort, “It’s not only our culture, but how we are deployed in Canada, that has allowed us to stay engaged. Do Canada with Canadians, was my mantra — understand the country, understand the social responsibility. We spent time in a number of the provinces in which we operate. There are a lot of unique, different and cool places to do business in Canada.”

Rahinsky talks more about the company’s track record as a quality firm that goes above and beyond. For example, during the pandemic, Hotel Equities looked at the brand standards and used those as “table stakes,” adding additional steps into the equation. In terms of cleaning, they would clean more frequently, and use better quality materials and chemicals. If a certain antibacterial content was required in a cleaning chemical, they would go to a higher content. “Whatever guidelines the brands had, we would apply our best thinking and take it to the next level,” Rahinsky said, adding that some brands have copied their initiatives.

In terms of expansion, he said they “couldn’t be more bullish on Canada,” and that in some ways the COVID pandemic has accelerated the growth because of some of the opportunities. “There will be a flight to quality in terms of acquisition and management. It’s easy to perform well when everything is going well. But you can tell who’s swimming naked when the tide goes out.” A crisis like this tends to weed out the managers who don’t have the expertise, training or processes. “We think we will see momentum out of this downturn because of all the things we can apply. We are looking to work with developers and joint ventures, and there will be some additional land opportunities that might have been to expensive five or six months ago. The math may work [now].

“The reality is we get bigger because we get better,” said Rahinsky. “The COVID situation could create and accelerate opportunities that may have taken years to establish.

“We came to Canada [less than] three years ago, but we have focused on Canada for about five years, long before we put a flag in the ground. We took a lot of trips to understand the market, the culture, the business environment and the people. We fell in love with the people and everything else is secondary. Hospitality is a people business, and we have never found anyone who is more genuine, decent and humble than our Canadian partners. The law of averages keeps pointing back to Canada.”