New five-star hotels raise the bar in Toronto, Vancouver
If there was a bull market in the luxury hospitality sector, Toronto would be right in the middle of the mother of all rallies.
In the past year alone, four luxury hotels – a new Four Seasons, the Shangri-La, the Trump Hotel and the Ritz-Carlton – have opened and welcomed visitors to Canada’s largest city. All have room rates starting around $500 per night, according to their websites.
The newest to open, the 259-room Four Seasons in the heart of upscale Yorkville, marked the revival of an iconic Canadian brand in its hometown. It also marked the entry of celebrity chef Daniel Boulud into the Grand Nord Blanc’s private Michelin star culinary scene.
This for a city that, before this recent development boom – and with the exception of a handful of high-end boutique hotels – lacked genuine five-star accommodations.
“I think Toronto has been underserved from a luxury hotel perspective for years,” said Bill Stone, executive vice president of real estate advisory firm CBRE Hotels. “There were hotels like the Windsor Arms or the Hazelton, but they weren’t enough to meet the demand.”
Toronto isn’t the only city in Canada to have recently seen a luxury lodging boom. Vancouver has seen the addition of three new upscale properties since 2009, including a Shangri-La Hotel, the Fairmont Pacific Rim Hotel and the Rosewood Hotel Georgia.
But this wave of five-star development raises a crucial question: With the global economic recovery progressing at a snail’s pace and uncertainty hampering the spending plans of everyone from the wealthiest vacationers to big corporations, how many bedrooms in high-priced hotel cities like Toronto and Vancouver are absorbing?
David Larone, Toronto director of hospitality consulting firm PKF Consulting Inc., says average daily rates rather than the number of rooms are the key metrics to watch to predict the potential success of this new round of development. He notes that in Toronto, the four new five-star properties added just under 1,000 rooms to the downtown hotel supply of about 17,000 rooms. That might seem like a lot until you factor in the closure of the former Four Seasons and celebrity magnet Sutton Place, hotels that together housed more than 700 rooms. (Both of these properties are being converted to condos.)
“The number of rooms in itself is not a big problem,” says Mr. Larone. “The question is, ‘Can you absorb that many hotel rooms entering the high end of the market at the same time?'”
His conclusion: Toronto and Vancouver are not only able to absorb this new luxury supply, but they will continue to attract both the leisure and business clientele needed to sustain and grow the business over the long term.
Mr. Larone predicts that as these new properties go through the typical five-year ramp-up period that any luxury hotel faces to solidify its customer base, occupancy rates will hover around 60% before to strengthen to around 68%. percent by 2017. The average annual hotel occupancy rate in Toronto typically hovers around 73 percent, he says.
Interestingly, discerning renters might not have had the chance to take advantage of the new five-star offerings in Toronto and Vancouver if it weren’t for the recent condominium boom in those cities. Almost all new luxury hotels in these cities have an attached condominium component.
Monique Rosszell, Toronto-based senior vice president at HVS Global Hospitality Services, says marrying luxury condos with posh hotel brands is part of the new economic reality for high-end hotel developers.
“Hotels wouldn’t be doable on their own,” she says. “The cost to build is too high, so obviously they’re subsidized by the condos. But from a day-to-day operational perspective, the condos benefit the hotel.”
How? In addition to having a name such as Four Seasons or Ritz-Carlton attached to their property, condo owners often enjoy posh privileges such as room service, shared amenities such as swimming pools and bathrooms. sport, while also having access to high-end hotel retail and catering components.
The hotel’s brand and amenities attract condo buyers, and in turn those buyers offset the massive capital costs of building a type of hotel capable of commanding room rates that can easily exceed $1. $000 per night for larger suites.
Ms. Rosszell points out that true hotel opulence these days is more than just bragging about immaculate interiors, offering state-of-the-art in-room technology or providing attentive concierge services – although they are all indispensable. Luxury hotels must now offer fine dining, such as Mr. Boulud’s new café at the Four Seasons in Toronto or Market, the restaurant of celebrity chef Jean-Georges Vongerichten at the Shangri-La in Vancouver.
Then there are the amenities. Take the in-house spa, for example. According to Ms. Rosszell, having a calming space to properly pamper guests is the new mint on the pillow – and a priority for five-star consideration.
But even as guests’ preferred amenities change over time, a critical aspect of running a successful luxury hotel remains the same: the need to deliver attentive, even obsessive levels of service.
This is a reality close to the heart of Dimitrios Zarikos, regional vice-president and general manager of the Four Seasons in Toronto.
“We have to provide the service or we are doomed. It’s always about the service because other hotels also have great products. We have to stand out to do better than everyone else.”
New luxury haunts
Looking for luxury accommodation in Toronto or Vancouver? Due to a recent development boom, there are more options:
Shangri La – 202 rooms
Four Seasons – 259 rooms
Trump International Hotel and Tower – 261 rooms
Ritz Carlton Toronto – 267 rooms
Shangri La – 119 rooms
Rosewood Hotel Georgia – 156 rooms
Fairmont Pacific Rim – 377 rooms