Domestic travellers accounted for 75 per cent of the Canadian tourism sector’s total revenue last year, as many opted to stay home rather than travel to U.S. destinations. Meanwhile, international arrivals stayed strong as economic conditions supported ongoing traveller spending.
That paid off for hotels in Western Canada, supporting occupancies, room rates and ultimately the cash flows that underpin operating revenues. CoStar data points to national room rates rising 3.5 per cent to $217 a night, while revenue per available room (RevPAR) rose nearly 4 per cent to $143 a night.
Western Canada reported exceptionally strong rate growth in the period, led by Alberta and Manitoba at nearly 8 per cent, while Saskatchewan saw the region’s strongest growth in occupancy and RevPAR – the latter growing by 12 per cent.
The strength of the market made it an ideal time for Chander Ramanathan and his partners to sell Manitou Springs Resort & Mineral Spa in Manitou Beach, Saskatchewan. Picked up at an attractive price during the pandemic, when values were depressed, the 108-room property sold for $13 million on Nov. 24. A destination property, its mineral springs have attracted a loyal following among seniors and others drawn by the water’s wellness benefits. This has also supported cash flows, with average daily rates increasing to $156 as travel recovered following the pandemic.
“It was doing well. We could have kept it, but we got a good price so we said, ‘let’s exit,’” explained Ramanathan, who facilitated funding in his role as a senior vice-president with CFO Capital.
The buyers who acquired the resort have three hotels under well-known brands in Ontario, making the Manitou Springs purchase a strategic diversification promising good cash flow.
“The uniqueness of the property will give you a return in the future as well,” Ramanathan added.
He said the former owners intend to reinvest proceeds from the sale elsewhere in the hotel sector.
“We’ve been scouting,” he said, noting that the headwinds facing real estate have taken off some of the pressure even as the fundamentals of hotels are holding up.
“There’s a lot of opportunity, for sure,” he said.
Colliers Hotels, for its part, estimates approximately $2.2 billion in hotel deals nationally in 2025, up 11 per cent from a year earlier. The average price per room was also up, rising 36 per cent to $219,000 per suite.
Western Canada’s share of the total was $594 million, or 27 per cent.
The high cost of construction mean existing properties are in demand, as they can be had for below replacement value. Silver Crest Lodge, a well-maintained 97-room motel in Grande Prairie, Alberta, which sold a year ago for $2.3 million, is a case in point. The listing agent, Ovais Siddiqui of Grand Realty & Management Ltd., described the asset as a turn-key acquisition with stable revenues and potential for future growth in a strong market.
Similarly, Sunray Group consolidated its position in Regina last summer with the acquisition of a parkade adjacent to its existing hotel property. While the deal included 30,000 square feet of office space, it gave Sunray full management of the site.
“It was a strategic buy for us, in order to enhance and improve upon our hotel operations,” Sunray president and COO Kenny Gibson told Western Investor. “We really needed the parking, but we weren’t afraid of the office building.”
The purchase came at an opportune time for Sunray, which plans upgrades to the property as part of a rebranding. These include the potential addition of event space and an indoor pool.
“We like the market there for what we have,” Gibson said of Regina, where high construction costs have cooled other forms of development. “If you have a long view in Western Canada, I think the investments will pay off in spades in a few years.”
In B.C., the Shangri-La Vancouver is probably the most high-profile hotel to change hands over the past year, its 119 rooms trading to Brookfield Asset Management in July for an undisclosed sum (media reports pegged the value at between $150 million and $200 million). Hyatt Hotels has assumed management and will undertake an extensive renovation prior to reopening this year under the upscale Park Hyatt banner.
Builders have also started stepping up in Vancouver, as there is strong demand for hotel rooms in the under-supplied market, which will play host to the FIFA World Cup this summer.
“In B.C. we’re starting to see hotels proceed,” said Cindy Schoenauer, a senior vice-president with Cushman & Wakefield in Vancouver specializing in the hospitality and leisure sector.
CoStar reported 21 hotels under construction in B.C. at the beginning of 2026, accounting for 2,700 rooms in both major markets and smaller centres such as Fernie, Merritt, Grand Forks and Parksville. This is up from 13 last year.
“With the legislation around Airbnb, we don’t have short-term rentals. So we have some opportunities for hotel supply to continue to grow,” Schoenauer said.
A staff report presented to Vancouver city council last month noted that the city has 27 hotel projects totalling 5,770 rooms at various points in the approval process from review through construction.
“Most sites today in downtown Vancouver have all got ‘hotel’ stamped on them right now,” said Kirk Kuester, executive managing director with Colliers in Vancouver. “Those that have sites really have no choice today but to look towards building them out.”
It’s become the alternative to office development in the core, perhaps best illustrated by a deal between Reliance Properties Ltd. and Montreal’s Germain Hotels last spring to acquire and convert the former office tower at 1111 West Hastings St. in the core to a 180-room boutique hotel. That project is set to open by 2029.
But in many cases, hotels still don’t add enough value to a site to make them viable on their own, resulting in a retail or residential component.
A good illustration of the shifting economics is Bosa Properties Inc.’s evolving plans for 888 West Broadway, formerly home to the Park Inn Suites by Radisson. Bosa Properties acquired the site in 2021, with plans in place for 437 hotel units across two towers.
It initially pivoted to a hotel-office combination before returning to a two-tower hotel concept, while the latest iteration presented last fall sees a combination of hotel and multi-family rental units. The hotel portion would, like its previous proposals, be under a Hilton flag.
“By combining both uses, you’re able to do several things that help viability,” said Bosa Properties vice-president of development, Kyle Wright, who considers hotels “the riskiest of the real estate asset classes.”
The hotel-rental combination also makes the project more acceptable to lenders.
“The residential use provides better financing potential, it’s also less costly to develop, and you also have the benefits of sharing services and amenities that benefit both uses,” he said.
The combination echoes Bosa Properties’ plans for 1300 Robson Street, where the former Listel Hotel is being replaced with 174 hotel suites and 126 rental units in a 28-storey tower set to complete by 2030, as well as the Cohen Block, formerly the Army & Navy department store on West Hastings Street, where a 179-room hotel is planned alongside 738 rental units.
