TOO MUCH, TOO LIT­TLE, OR JUST RIGHT?

Ottawa’s ho­tel in­dus­try con­tin­ues to hold its own. But if ca­pac­ity is not an is­sue, what is the key driver of new in­vest­ment?

Ottawa Business Journal - BOMA Magazine - - Generators Of Wealth - BY LEO VALI­QUETTE

Dick Brown isn’t afraid to dis­play his ir­ri­ta­tion when he hears com­plaints about a lack of ho­tel ca­pac­ity in Ottawa dur­ing pe­ri­ods of peak de­mand, such as ma­jor fes­ti­vals.

“That’s no dif­fer­ent than not be­ing able to get hockey tick­ets when the Sens are play­ing a favourite team,” said the ex­ec­u­tive di­rec­tor of the Ottawa-Gatineau Ho­tel As­so­ci­a­tion.

In fact, Ottawa’s ho­tel oc­cu­pancy rate hit 70 per cent last year, a few per­cent­age points higher than the 10-year av­er­age. While that’s a solid num­ber, it still re­veals there is un­used ca­pac­ity to ab­sorb.

Build­ing ho­tels isn’t cheap. It costs $250,000 to $350,000 per room to con­struct a full-ser­vice down­town ho­tel. The de­ci­sion to build is mar­ket­driven and many play­ers con­tinue to find rea­son to make the in­vest­ment in Ottawa. In fact, lo­cal ca­pac­ity has in­creased in the past year by about 12 per cent, thanks to the ad­di­tion of smaller venues in the sub­ur­ban mar­kets and the Court­yard Ottawa East by Mar­riott. That rate of growth ap­pears to be sus­tain­able. “In most mar­kets you would ex­pect to see some amount of slip­page as that new in­ven­tory gets ab­sorbed,” said Brown. “But to date we have been hold­ing our own.”

And new ca­pac­ity keeps com­ing. Groupe Ger­main has plans for a lo­ca­tion on Slater. A hy­brid condo/ho­tel is in the works for Sparks Street. Two more for the west end are in the plan­ning stages. Even home­builder Clar­idge is get­ting in on the ac­tion.

“I think it re­flects the health of Ottawa’s tourism and hos­pi­tal­ity econ­omy,” Brown said. “The tourism sec­tor has per­formed well in re­cent years ... the in­dus­try has co­a­lesced ... it works col­lab­o­ra­tively bet­ter than in most other cen­tres.”

COL­LAB­O­RA­TION VS. HEALTHY COM­PE­TI­TION

Of course, that spirit of col­lab­o­ra­tion doesn’t mean area ho­tels are not in fierce com­pe­ti­tion with each other. No ho­tel can af­ford to stand still if it wants to re­main rel­e­vant to the evolv­ing tastes of the leisure and busi­ness trav­eller, said Daniel Lal­ib­erte, GM of the 40-year-old Ottawa Mar­riott on Kent Street.

“Ev­ery ho­tel, ev­ery brand, has a re­quire­ment, as far as scheme, colour, that sort of thing, as to what will go in the room,” he said. “Every­body looks at what every­body else is do­ing. We do fo­cus groups with clients, to see what is im­por­tant in the room, what do they do when they get in the room, what kind of things do they want?”

More and more, guests want the same cozy feel of a res­i­den­tial home, he said. It be­gan a decade ago with bet­ter beds and fluffy white du­vets that eas­ily demon­strated the bed­ding was clean and fresh. Then it moved on to the bath­rooms. In newer builds th­ese have grown larger, equipped with big­ger shower stalls and gleam­ing tile. Most ho­tels of three stars and above are now of­fer­ing spa-qual­ity, brand-name soaps and creams, in­stead of the old generic ver­sions bear­ing the ho­tel’s logo, and in larger quan­ti­ties.

For an older ho­tel such as the Mar­riott, it isn’t al­ways fea­si­ble to push back a wall and en­large a bath­room, but chang­ing tastes are im­pact­ing in other ways. Lal­ib­erte just spent $250,000 to in­crease the size of the band­width pipe bring­ing high-speed In­ter­net into the build­ing to en­sure a min­i­mum of 5 MBs per room. Wire­less has be­come ta­ble stakes, so much so that a wired con­nec­tion in a guest room has al­most be­come an anachro­nism.

Pro­vid­ing that full con­nec­tiv­ity, even the means for guests to out­put their own video to their rooms’ TVs, is an ex­pected amenity ho­tels can’t ig­nore even though it is erod­ing tra­di­tional rev­enue streams, such as pay-per-view tele­vi­sion ser­vices. While some ho­tels still charge for a wi-fi con­nec­tion, this too will soon fade away like charg­ing for lo­cal phone calls did, Lal­ib­erte said.

CATER­ING TO THE DIG­I­TAL NO­MADS

What, or more pre­cisely, who, is driv­ing all of this?

“It’s a mix of work and play that re­ally ad­dresses the new gen­er­a­tion,” Lal­ib­erte said.

While boomers still con­sti­tute the bulk of ho­tels’

clien­tele, within five years, the younger gen­er­a­tions will ac­count for half, he said. In 10 years, they will rep­re­sent the reg­u­lar trav­eller.

This de­sire to mix work and play and be mo­bile also ex­tends to the com­mon ar­eas of a ho­tel. Gone are the days of the stuffy din­ing room. To­day’s look is a much more open, multi-pur­pose space that in­cludes ar­eas for ca­sual and more for­mal din­ing, as well as a bar and even a cafe. Guests can eas­ily move back and forth be­tween work and leisure ac­tiv­i­ties.

Be­tween new builds and the never-end­ing need for es­tab­lished venues to stay cur­rent and rel­e­vant to a new gen­er­a­tion of trav­eller, Ottawa’s ho­tel busi­ness ap­pears to be on a steady track.

There are of course chal­lenges. For Lal­ib­erte, th­ese are twofold. The first is em­ploy­ment cut­backs by the fed­eral gov­ern­ment, which re­mains a key “de­mand gen­er­a­tor.” The sec­ond is the new Con­ven­tion Cen­tre, which, de­spite its im­prove­ments over the old Congress Cen­tre, is still lim­ited by its size in terms of the groups it can at­tract when com­pared to larger meet­ing venues in Mon­treal or Toronto.

Still, Brown is con­fi­dent in the ap­peal of what the Ottawa mar­ket has to of­fer.

“We have a good ac­com­mo­da­tion prod­uct,” he said. “If we can con­tinue the growth, some­one may very well de­cide to make the in­vest­ment in a large full-ser­vice ho­tel in the core, but as I al­ways say, that will be driven by busi­ness num­bers.”

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