Massive market beckons for contractors, developers building all-suites hotels, say Hilton executives

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Canadian Design and Construction Report staff writer

There’s increasing demand and a largely untapped market for all suites hotels in Canada – and Hilton Hotels and local developers are creating an impressive pipeline of opportunities for designers and builders who can combine speed, quality and cost-effectiveness in their construction processes.

These achievements were reflected at the grand opening ceremonies for the Home2 Suites hotel in Brampton, the first in the Greater Toronto Area and one of the first in Canada, which shares a site with a Hilton Garden Inn. Both properties are owned by developer JM Hospitality, which is preparing to build even more hotels including a “triple branded” site at an as yet undisclosed location within the Greater Toronto Area.

Hilton officials say the hotel currently has nine all-suites hotels in the pipeline in Ontario, with an additional six hotels in other provinces. The hotel organization is cautious about revealing specific details about upcoming projects to protect commercial confidentiality, but the numbers – and potential additional projects – indicate a multi-billion dollar opportunity for designers and contractors.

“It’s been a very robust market and in Canada, we see a tremendous amount of growth on all levels, especially in the all suites category,” said Alan Roberts, global head of Embassy Suites by Hilton.

“In the U.S., the all-suites category represents about 16 to 20 per cent of the marketplace in terms of inventory,” he said.  “In Canada, it was 6 per cent five years ago – but that number is now closer to 4 per cent, as we’ve added more transient hotels and diluted that number.

“So it creates a real opportunity in the all suites space,” he said.

Hilton has developed three brands in the category. Embassy Suites serves the high-end market, with full hotel services coupled with the all-suites design. The next category is Homewood Suites, that takes a middle ground.  Home2 Suites serves the budget end of the market – but the new Brampton hotel certainly does not convey an image of cheapness.

The suites are spacious, bright, and have amenities and features designed to appeal to someone who will be making the hotel room into their home away from home, in many cases for a week or two. There’s even a cupboard on the wall where visitors are encouraged to set up their own personal artwork and displays.

Hilton managers at a media round table in early July made clear that they don’t dictate to hotel developers which designers, contractors and subtrades to use, though they will make recommendations and warn owners of potential problems if they’ve had bad experiences in the past.

Hotel construction requires both speed and quality control; the longer it takes to build the hotel, the less revenue the operator can earn, while increasing carrying costs. As well, since hotels are often built to templates with standard room types and sizes, they can be among ideal candidates for efficient modular construction.  In fact, a Home2Suites in San Francisco area is the first modular-built hotel in the area.

The Home2 Suites in Brampton was constructed with “total precast” technology and its completion was incredibly quick – about 30 days. (See separate story.)

While Hilton wouldn’t discuss the actual construction costs or project value, one manager said “we’re looking at about $200 a square foot in hard construction costs.”  Of course, there are land costs and other expenses – and these will vary by location.

Hotel management/brand companies and developers seek to develop symbiotic relationships; the hotel brand collects management fees and ongoing revenues, while the developer benefits from the hotel company’s brand recognition and operating systems. Since Hilton has several different brands serving different categories, developers can (depending on the site), combine more than one brand on the site with common facilities and amenities.

(The Home2 Suites and Hilton Garden Inn in Brampton for example share a common convention/meeting area. While the Home2 Suites offers a free breakfast for guests, if they want to eat a more substantial evening meal or have a drink, they only need to walk down the corridor to the restaurant at the Hilton Garden Inn.)

Overall, Hilton says it has 65 Hilton properties under construction across the country, in the various categories, including Waldorf Astoria, Conrad, Hampton Canopy and Tru. Internationally, the company would like to open 100 Home2 Suites properties every year, and could have 1,000 by 2025.

 

 

 

 

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