Prospective hotel purchasers circled around a relatively limited supply of properties in the Canadian market during the first half of 2025, pushing up the average price per room, but falling short of deal volume for the comparable period last year. Colliers Hotels reports roughly $963 million worth of deals, Canada-wide, in the first six months of the year, down 26 per cent from the first half of 2024.
A total of 72 transactions equates to an average deal size of $13.4 million, while the average price per key rose by 18 per cent year-over-year to $192,000. Canadian hotel occupancy and earnings likewise made gains from the spring of 2024, with occupancy nudging up to 69.7 per cent, the average daily rate (ADR) at $216 and revenue per available room (RevPAR) at $150 during the second quarter this year.
“Investor confidence remains high and is fuelling robust pricing across all service segments,” Colliers analysts maintain. “Heightened competition and strong valuations have driven favourable sell-side conditions, though limited product availability continues to constrain deal flow with more buyers than sellers in the market.”
Ontario has seen the majority of the deal action thus far this year. Three transactions in the Greater Toronto Area account for nearly 24 per cent of total sale value in the first half. That’s in keeping with the trend that has seen 60 per cent of deal volume, or about $550 million worth of transactions, occur in major markets.
However, Northern Ontario has proved fruitful for investors targeting secondary markets — engendering five trades during the first half of the year. Colliers analysts also highlight Q2 deals in Peterborough, Guelph, Barrie and Welland, and in secondary markets beyond Ontario, in Bonnyville, Alberta, and Port Hawkesbury and Truro, Nova Scotia.
Among deals with disclosed purchase prices, the Ottawa Embassy Hotel & Suites was the biggest in Q2, at $32.5 million or $232,100 per room. Holiday Inn and Express & Suites Welland garnered the top price per room at $248,000. The latter deal included excess land with development potential, as did the April sale of the Sheraton Toronto Airport Hotel & Conference Centre, which traded for an undisclosed price.
Colliers analysts predict continued momentum for the second half of the year.
“Several large-scale transactions have already closed in the third quarter, surpassing total Q2 volume,” they report. “Based on the current pipeline, Colliers forecasts year-end transaction volume to approach $2 billion, in line with 2024 levels.”
