Vancouver Airport and Chateau Whistler hotels sold
Bruce Constantineau
Sun
Fairmont checks out of hotel ownership Fairmont Hotels & Resorts is selling seven of its landmark Canadian inns in a deal valued at $1.5 billion. Included are these Western Canadian assets: Clockwise from the top: Fairmont Banff Springs, Fairmont Jasper Park Lodge, Fairmont Chateau Lake Louise, Fairmont Chateau Whistler and Fairmont Vancouver Airport hotels have been sold.
The Fairmont Chateau Whistler and Fairmont Vancouver Airport hotels have been sold to an Ontario pension fund in a seven-hotel sell-off worth an estimated $1.5 billion.
Other Fairmont hotels acquired by Toronto-based Oxford Properties include the Chateau Lake Louise, Jasper Park Lodge, Banff Springs, Le Chateau Montebello and Kenauk at Le Chateau Montebello.
Oxford is a subsidiary of Ontario Municipal Employees Retirement System and the transaction repatriates the prominent hotels into Canadian hands. Toronto-based Fairmont Hotels and Resorts is a private company controlled by Saudi Prince Alwaleed Bin Talal and Colony Capital of Los Angeles.
Oxford owns and manages a
$6-billion portfolio of Canadian real estate assets, including the Marine Building in Vancouver, and the Fairmont transaction represents its first major foray into the Canadian hotel sector.
OMERS representative Debbie Oakley said the seven hotels represented a “one-time opportunity” it couldn’t pass up.
“They are obviously iconic destination hotels and they’re practically in our back yard,” she said in an interview. “They have performed very strongly and it’s a good fit for us because they are best-in-class assets. We see a strong management team, a strong platform and a strong brand.
“We’re not going to make a lot of changes at this point because we’re very confident in the management team and we’re new into this class of assets,” she said. “We’re going to settle in.”
Fairmont will continue to run the hotels under long-term management contracts and the properties will retain the Fairmont brand.
It’s a familiar hotel chain strategy, as Fairmont sold the Scottsdale Princess in Arizona for $345 million last month, but still runs the property.
The landmark 550-room Chateau Whistler opened in 1989 while the 392-room Vancouver Airport property was completed in 1999. The historic Banff Springs and Chateau Lake Louise hotels in the Alberta Rockies date back to 1888 and 1890 respectively while Jasper Park Lodge was built in the 1920s.
Le Chateau Montebello and Kenauk at Le Chateau Montebello in Quebec both opened in 1930.
The three Fairmont B.C. properties not included in deal — the Hotel Vancouver, Empress and Waterfront hotels — are all owned by Legacy real estate investment trust.
Pannell Kerr Forster hotel industry consultant Beth Walters said the sale is one of the most significant hotel industry transactions in Canadian history.
“In terms of dollar-per-room and total dollars [spent], it’s more in line with some of the international sales of premium properties we have seen,” she said in an interview.
Walters said a recent turnaround in hotel industry performance, particularly in western Canada, has created a stronger bottom line and pushed hotel values higher.
Vancouver hotel industry consultant Angus Wilkinson said it makes sense for hotel chains to sell real estate assets now and focus on long-term management contracts.
“Many hotel owners think we are close to the top of the market so if there are people with cash out there prepared to buy, this is a time to cash in,” he said.
“. . . Having only hotel management contracts is the way Four Seasons has operated for years. That’s why it has one of the highest stock prices of the hotel industry.”
© The Vancouver Sun 2006