The William Gray is part of the recent Montreal hotel boom, alongside the Four Seasons and spruced-up properties such as the Marriott Chateau Champlain.
Hotel William Gray
After a decade of declining room inventory, Montreal is beginning to see a renaissance in its hotel industry. Hoteliers are investing in new construction as well as redeveloping existing properties to meet growing demand from business travellers and tourists.According to CBRE Hotels’ proprietary database on the hotel industry in Canada, which closely tracks hotel performance across the country, occupancy rates in Montreal are better than they have been since the early 2000s. Not surprisingly, international hotel brands are taking notice.CBRE senior managing director David Larone said Montreal has seen a number of notable investments in hotel real estate recently, with the most significant being the addition of the Four Seasons Hotel downtown, which opened this spring.Larone said the coming of an internationally known luxury brand like the Four Seasons signals opportunity for investors and will set new benchmarks for the local hotel market.“It is a significant commitment and statement as a belief in Montreal as a great hotel market over a long-term basis,” he said.The Four Seasons project is also notable because it is part of a larger real estate development trend across Canada to build mixed-use properties. Instead of building a standalone hotel, larger projects are increasingly tied to commercial development as well. In the case of the Four Seasons, the hotel perches atop the revamped Holt Renfrew Ogilvy store, and includes a number of luxury penthouse properties for sale as private residences.In addition to the Four Seasons, there have been massive renovations and reinvestment in older buildings in Montreal, like the Marriott Chateau Champlain, and the construction of new properties like the Hotel Monville, the AC Hotel by Marriott, the Holiday Inn downtown, the Courtyard by Marriott and the Hotel William Gray.Despite all the new inventory, Montreal is far from a risk of oversupply, Larone said. In the past 10 years, some older hotel properties were taken out of inventory and many were converted to other uses, such as student housing, he said. Overall, the supply of rooms in Montreal has decreased slightly since 2009, by about 400 rooms.The approximately 16,000 rooms in the Montreal area are in hot demand, Larone said. Occupied room nights are expected to be up 25 per cent in 2019 compared to 2009.Larone said the strength of the local hotel property market is intimately linked with the health of Montreal’s economy. Meetings and conferences are the bread-and-butter base for local hotels, he said, so the job boom in Montreal over the past few years has had a big influence on occupancy rates.Of course, tourist traffic is also a major factor. Montreal has been hosting record numbers of tourists, with Trudeau airport welcoming 19 million passengers last year.“The hotels are at the end of the food chain,” Larone said. “We’re dependent on meeting and conference business. Montreal also has tremendous seasonal and weekend business, especially in summer.”You might think the growth in popularity of Airbnb-type vacation rentals could have a negative effect on the hotel industry, but Larone said the evidence doesn’t support that.“Airbnb units are not a new phenomenon. It hasn’t really had an impact in this market,” he said. “We recognize it is a substantial industry and is not going away.”Although Larone said Airbnb hasn’t had a detrimental effect on the hotel industry, he added that hoteliers want to see a level playing field. For example, governments should require Airbnb hosts to meet the same standards for fire safety and tax obligations, he said.In Canada, the hotel supply is forecast to increase by two per cent in 2019, which would be the highest single year of supply growth in the national hotel market since 2008. Revenue per available room is also trending up, and is expected to rise four per cent this year.Related