Sitting in a brightly lit restaurant at Ottawa’s newest downtown hotel property on Monday afternoon, Morguard CEO K. Rai Sahi was beaming like the father of a newborn.
“I’m so pleased to see the finished product,” he said during an interview with OBJ, referring to the pair of Hilton-branded lodgings his firm developed on Queen Street at the site of the former National Hotel.
“If you told somebody that we built it from scratch, they wouldn’t know the difference. It looks brand new.”
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While Sahi was all smiles on Monday, the process of converting the 44-year-old pair of highrises into a Hilton Garden Inn and Homewood Suites by Hilton didn’t happen without a few hiccups along the way.
When the project was announced in 2016, Morguard officials pegged the price tag at $30 million, but Sahi said Monday it ended up costing twice as much as initially expected. Still, he said he had no complaints.
“It’s basically almost a new building,” he said. “We went down to the bone.”
Several years ago, Morguard looked at demolishing the 10- and 17-storey hotel towers as well as the smaller office highrise next door and replacing them with a new hotel and apartment complex.
But Sahi said after doing the math, Morguard decided it didn’t make economic sense to construct rental units at the site. In addition, some tenants in the office tower still had nearly a decade remaining on their leases, meaning the company would have faced a long wait to tear down the building.
“We said we actually don’t have a choice. We can’t demolish the whole thing.”
Instead, the Mississauga-based real estate developer – which is Ottawa’s largest commercial landlord with more than five million square feet of property in the capital – decided to gut the two hotel towers and rebuild them. After considering several brands, they inked a deal with Hilton to turn the buildings into the chain’s first properties in downtown Ottawa.
It also marked the first time the iconic hotelier agreed to convert an existing building in Canada into a dual-branded property. Normally, Hilton prefers brand-new builds in such situations, but the chance to grab prime real estate in Ottawa’s core convinced the chain to make an exception, said Sanjay Rateja, Morguard’s vice-president of hotel operations.
Morguard now owns 39 hotel properties with a total of 6,000 guest rooms across the country. Hotels still make up only a small part of the firm’s overall operations, but Rateja said Ottawa’s newest Hiltons have pride of place in that growing portfolio.
“This is our crown jewel,” he said with a smile.
Hilton’s arrival downtown comes in the midst of a mini-boom for Ottawa’s hotel industry, which has seen several new high-end properties open in the core over the past few years. Another 1,000 or so rooms are expected to be added to the city’s inventory over the next 12 months, but Rateja said he’s not worried the market is in any danger of becoming oversaturated.
“This was a slam dunk,” he said. “All the stats tell us we are going to do really well, and if it keeps on doing well, we’ll probably look at another opportunity for another hotel somewhere (in Ottawa).”
The 17-storey Homewood Suites property includes 171 extended-stay units, while the 10-storey Garden Inn features 175 rooms targeted at guests planning shorter visits. Amenities include about 5,000 square feet of meeting space along with a swimming pool and fitness centre.
The properties officially opened for business on Dec. 28. General manager Denis Gilles said the two hotels combined for an overall occupancy rate of about 65 per cent in February, an “extremely good” number for a property in just its second month of operation. Gilles said he’s predicting the hotels to be 80 per cent occupied in May and June.
Rateja said there is “huge demand for extended-stay business in Ottawa” for federal government clients and guests in other burgeoning sectors such as high-tech, adding he expects the shorter-stay tourism market to remain steady thanks to popular events such as Bluesfest at nearby LeBreton Flats.
“Ottawa, as we have seen over the years, has been doing better and better as far as hotel accommodations are concerned,” he said. “There are many more hotels coming, which is good for the city.”