The Opportunity

Radisson was a poorly asset managed property in Canmore, Alberta that the previous pensions fund owners had put on the market. The Canmore real estate market was still depressed, with an overhang of condo supply. Hotel operating performance had not recovered from the financial crisis. The deal was brought to us by an operating partner with whom we thought we could have a successful business relationship. The purchase price was well below replacement cost, and we recognized that by changing hotel brands and self-managing the property we could improve performance.

The Challenge

Property improvements had been fully consumed, and the guest experience from beds to Wi-Fi and everything in between was underwhelming. The Radisson flag did not have enough weight in the market to attract travelers to the hotel, so we opted for the Coast Hotel brand. The property was also heavily dependent on low-pay tour groups versus the more lucrative transient client. We had to either shift our focus more towards transient travelers or get group/tour customers to start paying more.

The Financial Transaction

Our operating partner, whom we had known for a while, brought us the transaction. The deal was structured to provide a clear alignment of interests between both parties, and HCI’s focus on long-term asset ownership differentiated it from other potential partners.

The Deal Drivers

  • We had the right partner, one with a deep understanding of the tourism business in Western Canada.
  • The asset was run down and acquired below replacement cost but had the potential to be a leading property in the Canmore market.
  • We like the enduring demand profile that authentic mountain experiences offer.

The Results

Ultimately ~50% of the purchase price was re-invested into the hotel, and NOI has increased 300% since purchase.