Thompson Okanagan BC Hotel & Motel Sales Data and Analysis
The following overview of the Hotel & Motel investment market during recent industry investment cycles provides a context for the following analysis.
The volume of Hotel & Motel transactions and the price paid for individual assets are influenced by two principal factors:
- the availability of capital
- the performance of the industry as a whole.
When high levels of leverage are available on favorable terms and the industry is performing well, investors are attracted to the market, and both prices and the number of transactions increase. These market conditions often induce sellers to put their properties on the market, further fueling the pace of transaction activity.
Conversely, when the availability of capital declines and when interest rates increase, both the pace of activity and pricing levels decrease. When these capital conditions coincide with a downturn in industry performance, the transaction market drops off significantly. In this environment, sellers are typically unwilling to put their properties on the market, electing to wait until market conditions improve.
The impact of these influences results in a cyclical investment market, recording peaks and valleys in response to changes in the capital markets and the economy.
Number of Days on Market
Days on Market (DOM) measures the number of days between a property’s initial listing and the date it either sold or was taken off the market. The Median DOM for Thompson Okanagan Hotels and Motels is 141 days.
DOM matters because when buyers notice the property’s above-average DOM, they’ll wonder what’s wrong. The question typically has three answers: price, condition, or location. A high DOM can also lead buyers to think you’re unmotivated, stubborn or unavailable.
Sale Price to Asking Price Ratio
Sold to ask ratio is simply calculating the percentage of list price that a property sells for. The Median Sale Price to Asking Price Ratio for Thompson Okanagan Hotels and Motels is 91.30%.
As a buyer, understanding how much hotels/motels are selling for versus their asking price will give you a good hint on how to approach negotiating an offer to purchase.
For sellers, sold to ask ratio is a good indicator of how to come up with a pricing strategy. The key is understanding what the market value is and then pricing accordingly.
Capitalization Rates
A cap rate generally indicates the return an investor expects to achieve on his or her investment, and the direct capitalization approach is a simplistic method of determining the value of a hotel. To determine the value of a hotel or motel using the direct capitalization method the net income divided by a cap rate equates to the value:
Net Income / Cap Rate = Hotel Value
Cap rates for Thompson Okanagan Hotels & Motels currently range between 8.00% and 9.50%.
2018 Market Analysis
2018 saw 14 hotel & motel transactions totaling $57,370,000. Sale price per room ranged from $40,714 to $142,623 with a median of $84,211.
2019 Market Analysis
2019 saw 11 hotel & motel transactions totaling $33,598,000. Sale price per room ranged from $43,387 to $231,410 with a median of $101,500.
2020 Market Analysis
2020 saw 5 hotel & motel transactions totaling $31,050,400. Sale price per room ranged from $52,914 to $165,108 with a median of $75,083.
2021 Market Analysis
2021 saw 19 hotel & motel transactions totaling $72,341,616. Sale price per room ranged from $28,704 to $514,286 with a median of $87,241.
Thompson Okanagan Hotel & Motel Sales Data
Thompson Okanagan Hotel, Motel & Inn Industry Overview
Top Markets
BC residents make up the largest share of overnight visitation (61%) and spending (44%) in the Thompson Okanagan region. Alberta residents make up the second largest share of overnight visitation (19%) and spending (28%).
Accommodation Trends
As of 2019, there are approximately 400 active hotel, motel & inn properties in the region. Half of BC residents and more than a third of other Canadians visiting the Thompson Okanagan region stayed with friends and family. The most popular accommodation for international visitors was staying with friends and family, followed by hotels.
- Kelowna and Kamloops are the most visited destinations in the Thompson Okanagan and also contribute over 50% of room revenue receipts.
- Penticton is a popular beachside community. The two other communities in the region which have experienced the strongest revenue growth are Oliver/Okanagan Falls and Osoyoos.
- Motels earn a higher proportion of room revenue in the Thompson Okanagan than in other B.C. tourism regions. There are few very large hotels (+250 rooms) in this region.
This article has been prepared by Frontier Hospitality Advisor for general information only. Frontier Hospitality Advisor makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Frontier Hospitality Advisor excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this article and excludes all liability for loss and damages arising there from.
