Sentiment at the recent Western Canadian Hotel and Resort Investment Conference was good.
Hoteliers, long dogged by fallout from the 2008 financial crisis and ensuing recession, are once again building, dealing and beginning to welcome guests. While leisure travel faces headwinds, business and convention travel are increasing as the economy improves.
Mark Sparrow, director, Western Canada, for CBRE Hotels, reported that B.C. posted a 3.4% increase in revenue per available room in 2012, with 62% occupancy – even with Ontario, but below every other region save Atlantic Canada and Manitoba. The average daily rate was $162.
But with developers casting a cautious eye on 2013, and sales at many properties having yet to match the rebound achieved by real estate in Vancouver and other centres, marketing is key.
James Askew, president of Vancouver-based rareEarth Project Marketing, who has marketed branded and independent developments, joined Scott Richer of Delta Hotels and Resorts and Jay Wilson of vacation services company Interval International to hash out the issues at the conference.
Askew, from the middle ground, told Business in Vancouver after the conference that a developer has to be clear about the capacity and character of the property.
Owner-users have been the most lively segment of the vacation property market this year, not the investors who previously dominated the market. Askew said developers need to recognize this, honing marketing to attract these buyers.
"Before, in the past, we tried to balance the needs of the hotel operator and the paying guest with the actual owners' requirements," he said. "[Now] you have to know what your market's after ... being a guest or a vacation home owner." Branding the property may be an important part of the strategy, Askew said.
Brands can create a perception of value that generates a higher velocity of sales, and a brand can also confer an identity on the property that can improve bookings.
A case in point is the Four Seasons Resort Whistler, which Askew marketed a decade ago.
"[There's] the promise of higher service, consistent occupancy, and potential long-term appreciation because of that brand," he said. "Those are some of the key reasons you'd want to bring a brand in. You're going to get all those intrinsic values for the buyers and guests."
On the other hand, Spirit Ridge Vineyard Resort and Spa in Osoyoos pursued a hybrid model. An independent property managed by Bellstar Hotels and Resorts of Calgary, it has its own unique identity but enjoys the operational benefits of being part of the Bellstar network.
Meanwhile, Watermark Beach Resort is a fully independent property rareEarth helped market that enjoys a prominent location in downtown Osoyoos that's contributed to its individual branding.
"They've done extremely well and continue to do extremely well in terms of their room rates and occupancies without a flag. And that goes back to the nature and quality of the location they're in," Askew said.
It also highlights the fact that flagged properties don't necessarily perform better, thanks to the fees associated with the management and operation of the unit.
"Having a really high-end good quality flag on there doesn't necessarily mean you're going to make more money at the end of the day because you may have higher rental management fees attached," he said.
Still, recreational real estate as an investment play is "pretty much dead and gone," so far as Scott Brown, senior vice-president, residential marketing and sales services for Collier International, is concerned.
"I don't see any signs of it resurrecting," he said earlier this fall.
He's handling sales of Boulder Creek, a 43-unit residential community at the Gary Player-designed Wildstone golf course in Cranbrook, which first hit the market in 2008.
The financial crisis stopped it in its tracks but, like many developments that stalled four years ago, it returned to the market. This year, as part of a court-ordered sales process, prices were reduced by 30% to 50% and sales – primarily to buyers downsizing or seeking a future retirement home – were healthy. Six units sold within a month of the first price reduction, and today there remain approximately a dozen units available.
The investors originally targeted by the development have been largely absent, and the buyers who did buy wanted to see long-term value in the units as residences. Slashing prices set a baseline for the property's value, but when prices began increasing, then sales started happening.
"I think people realized, 'Hey, my values are solid if they're moving up prices,'" Brown said. •
