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InnVest Hotels eyes US assets after buying the Trump Toronto

Trade tensions, 'frothy' Canada market cited by firm for its diversification strategy

The former Trump hotel in downtown Toronto will be rebranded the St Regis. InnVest Hotels added the hotel to its Canadian portfolio in 2017.


INNVEST Hotels LP, which added the former Toronto Trump hotel to its Canadian portfolio last year, is planning its first foray into the US.

Canada's hotel market has had a strong run in recent years, boosted by a booming economy and a weak currency that's attracted domestic and foreign travellers, particularly to cities such as Toronto, said Jeff Hyslop, senior vice-president of asset management at Toronto-based InnVest. That's made the market "frothy" so it's prudent to diversify into the US, particularly with trade tensions also hanging over Canada, he said.

"We'll be cautious in our first foray into the US to make sure it's the right market, right asset, right partner," Mr Hyslop said in an interview at Bloomberg's Toronto bureau. InnVest, owned by Hong Kong-backed Bluesky Hotels and Resorts Inc, is interested in markets including Seattle, Boston and Chicago, Mr Hyslop said, adding New York and San Francisco are too expensive.

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InnVest is following several Canadian real estate firms to the US, including Tricon Capital Group Inc and the real estate arm of insurer Great-West Lifeco Inc as prices have ratcheted higher at home. CBRE Group Inc said in March that the value of Canadian transactions is likely to slip in 2018 from near-records in the previous two years with fewer large-scale deals expected.

InnVest has 80 hotels in Canada with more than 11,000 rooms operated by international brands including Marriott, Comfort Inn, Fairmont and Holiday Inn. It also owns 50 per cent of Choice Hotels Canada Inc. The former Trump hotel will be rebranded the St Regis. InnVest has also invested about C$18 million (S$18.6 million) in the redevelopment of a former Holiday Inn site on Bloor Street to the Kimpton Saint George brand and may add more boutique brands and perhaps a resort.

This year, the company is focused on maximising its portfolio and offloading properties that don't add as much value, Mr Hyslop said. This includes about C$80 million worth of capital deployment, including for exterior renovations to its Comfort Inn buildings, of which it owns 53. The hotel chain is also seeking to ramp up the use of technology in its hotels, from housekeeping robots that deliver toothpaste to mobile-phone room access. The need to innovate and create better customer experience is partly driven by pressure from companies such as Airbnb Inc, Mr Hyslop said.

"The demand has been strong in Canada so we haven't seen a huge impact from an occupancy perspective directly from Airbnb," he said. "But when markets soften a bit, you do see that Airbnb is definitely something that we need to be cautious about." BLOOMBERG