While a distinctive classification of commercial real estate in their own right, hotels and resorts operate within a broader economic ecosystem that spans tourism, international commerce, and other industries. For entrepreneurs and investors seeking an entry point into this quickly expanding market, knowing where to begin can feel like an overwhelming task.
This post is designed to be a crash course on hotel and resort sales in Ontario, covering broad market trends, commercial real estate basics, and various investment models.
A unique alternative to traditional accommodation models, independent boutique motels are a rising trend among hospitality investors. Click here to read our 411 on boutique motels.
Intro to Hotel & Resort Real Estate
A specialized avenue among entrepreneurs, accommodation real estate differs from other commercial ventures in a number of ways. From the properties themselves to investor motives and market trends, the hotel and resort field is dynamic and nuanced.
One of the major differentiators of accommodation real estate is scale. While hotels or resorts may individually vary in size, amenities, and degree of service, they are generally assets of substantial market value. In comparison to smaller commercial properties such as restaurants, multi-purpose units or retail boutiques, accommodation real estate typically requires greater upfront capital. With this in mind, many industry players aren’t venturing into the market solo.
Scale & Investor Activity
From a bird’s-eye-view, accommodation real estate can be split into two broad categories – ground-up development projects, and the purchase or sale of existing hotel or resort properties. In both cases, the sheer scale of these ventures typically entails large hospitality corporations, conglomerates, or joint ventures among collaborating investors. In certain instances, independent entrepreneurs can utilize these structures and partnerships as an entry point to hotel and resort investment, development, or sales.
While less common, smaller-scale accommodation properties such as boutique hotels and motels will enter the market from time to time. Given their size and comparatively modest price points, these properties may suit some independent entrepreneurs.
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Ontario’s Tourism Profile
More than just Canada’s largest province by population, Ontario is also the country’s leading destination for tourists. Centred around Toronto, which sees an economic impact of more than ten billion dollars annually as a result of tourism, the province welcomes north of 30 million visitors every year.
The sheer size of Ontario’s tourism industry, paired with its role as a major hub for business and commerce has made it a hotbed for investment in accommodation real estate. In addition to private parties and corporate entities getting in on the action, both federal and provincial governments have actively invested in new developments over the past decade.
Growing Pains
In the realm of hotel and resort real estate, a wide range of unique setbacks have arisen in tandem with the exploding growth of Ontario and Canada as a whole. In addition to attracting a high volume of annual visitors, the province has also become a popular destination for both domestic and international relocators. As a result, many of its key industries and infrastructure are being impacted by the constantly expanding population.
One of the forefront challenges impacting entrepreneurs in this industry is the rising costs of real estate and development. With an elevated demand for housing, a lot of high-quality land is being quickly bought up by residential builders, leaving limited opportunities for accommodation projects. As an extension of this, supply and labour shortages stemming from a competitive residential space are also having an impact on new developments and revitalization projects.
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The Gateway to Opportunity
In addition to being an investment venture with strong profit potential, hotel and resort properties are highly specialized so optimizing your chances of success will entail expert support. For entrepreneurs seeking entry into Ontario’s vast and opportunistic accommodation real estate market, the path to success begins with a leading commercial broker.
Driven, solutions-based commercial specialists, Carve Real Estate can help you exceed your entrepreneurial goals. After unpacking your aspirations, we get to work in search of the perfect investment opportunity for you. Once identified, we’ll incorporate our precise, industry-specific business skills to get the deal done with finesse.
Looking to buy or sell an accommodation property in Ontario? As leading commercial real estate experts, we’ve got the tools and know-how to help you be successful. Click here to send us an email.
