Hotel chain hunting for Ottawa property

Groupe Germain expanding in Canadian urban markets

A growing Quebec City-based boutique hotel operator is looking for local development sites to crack into the Ottawa market.

Groupe Germain Hospitality operates five of its namesake upscale hotels as well as three of its “no-frills chic” facilities, under the name Alt. Another four are currently under construction.

The company says it wants to establish both its brands in Ottawa – a market, observers say, experiencing a shortage of hotel rooms – and is looking for development opportunities in the central business district and the ByWard Market.

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“Alt is currently undergoing big growth right now across the country,” says Hugo Germain, director of development for Alt Hotels Canada, citing a $240-million commitment the company made in 2010. “The goal is to establish a presence in 10 markets in the next four years.”

The group is keeping the exact location of potential properties close to the chest, saying that discussions are preliminary and that it would be premature to disclose locations.

Given the shrinking number of downtown development sites in Ottawa, the company may opt to combine its hotel with a residential condominium. A little more than two years ago, the firm opened Hôtel Le Germain Calgary, its first combined concept, incorporating a 143-room hotel, 85,000 square feet of office space and 40 private residences.

Rooms at Hôtel Le Germain Calgary start at $279 a night, according to the company’s website.

Mixing office and residential uses within a single building remains relatively rare, in large part because of differing construction techniques and specialty areas among property owners.

However, combining condos and hotels is becoming more popular in major cities because of increasing land costs and limited supply, observers say.

“If you look at the supply that is coming into the market, these are hotels that have for the most part been built as mixed-use concepts,” says Alam Pirani, executive managing director of Colliers International Hotels. “Primarily, it’s the residential condominiums with the hotel component.”

Dick Brown, executive director of the Ottawa Gatineau Hotel Association, says the development land premium is likely pushing hotel operators to mixed-use.

“It’s extremely expensive, a three- or four- or five-star hotel. You can spend about $250,000 or $350,000 (building each) room.”

A report earlier this year by Colliers International Hotels says Ottawa hospitality properties are set to increase in value by the largest magnitude in all of Canada.

Its annual hotel value index for Ottawa is set to increase by 6.7 per cent in 2012, compared to the national average of 4.4 per cent. Colliers bases its index on factors such as investor yield expectations, market performance, changes to the supply of and demand for hotel rooms as well as the overall economic health of a given market.

Depending on how quickly it gets approvals, an Ottawa Groupe Germain or Alt hotel could be ready in 18 to 24 months, says Mr. Germain.

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