HomeMy WebLinkAboutCAO 04-22
Pl(KERJNG
Report to Council
Report Number: CAO 04-22
Date: May 24, 2022
From: Fiaz Jadoon
Director, Economic Development & Strategic Projects
Subject: Accommodation Needs Study
-File: A1440
Recommendation:
1. That Report Number CAO 04-22, regarding the Accommodation Needs Study by CBRE
Limited, be received;
2. That the Accommodation Needs Study, prepared by CBRE dated May 2021, be
endorsed in principle;
3. Council authorize staff to enhance investment attraction opportunities, related to the
development of a hotel in Pickering’s City Centre, as part of the City’s investment
attraction program; and
4. That the appropriate City of Pickering officials be authorized to take the necessary
actions as indicated it this report.
Executive Summary: The purpose of this report is to provide Council with an update on
the Accommodation Needs Study prepared by CBRE Limited. The study is an update to the
Market Study Report completed in 2017 by CBRE Limited, which identified the need for a hotel
in Pickering.
Through the COVID-19 pandemic there have been many changes to the local and broader
economy, particularly in the travel and tourism industry. CBRE was retained by the City to
conduct an analysis of the current market and provide their recommendation for a hotel in
Pickering. Based on the economic outlook, current population, projected growth and other
factors further defined in the study, the Accommodation Needs Study conducted an analysis of
Pickering’s City Centre area and the Pickering Innovation Corridor to determine which location
will be most suitable for a hotel development by 2025.
The scope of work also included an analysis of the overall economic market conditions and
identification of the type of hotel required, property performance and competitiveness. CBRE’s
research confirmed the overall economy and tourism industry are projected to approach pre-
pandemic levels beginning in 2022 as travel restrictions are lifted. Pickering is home to quality
tourism demand generators such as Pickering’s Waterfront, Pickering Museum Village,
Durham Live, Rouge National Urban Park and other future demand generators like the
redevelopment of the City Centre. These demand generators also contribute to the market
readiness and investment of a hotel development in an area.
CAO 04-22 May 24, 2022
Subject: Accommodation Needs Study Page 2
Through CBRE’s market analysis, the study identified that regardless of the City Centre
redevelopment project being deferred at this time, the City Centre is the prime location for a
hotel development at this time. As the Pickering Innovation Corridor is in early phases of
development, CBRE does not foresee a demand for a hotel until it is completely developed.
As such, City staff recommend enhancing the investment attraction opportunities for a hotel
development in Pickering and include it as part of our investment attraction program within the
City’s Economic Development Strategy. It should be noted that CBRE’s findings are based on
the presumption of steady economic growth, development of demand generators and market
status.
Financial Implications: This report contains no financial implications to the City of
Pickering.
Discussion: In March 2017, City of Pickering retained CBRE Limited to
undertake a hotel needs assessment. The assessment was to understand the current market,
at the time, and determine if there was a need for a hotel in Pickering. Through CBRE’s
preliminary assessment, the previous study indicated there was a need for a hotel in Pickering.
The study further considered the economic sustainability of a hotel in Pickering with the
projected population growth and identified two potential locations for a hotel. At that time, the
City Centre and Pickering Innovation Corridor were the two locations recognized for a potential
hotel site.
In December 2021, Economic Development & Strategic Projects staff retained CBRE to update
the CBRE analysis completed in 2017, and to further investigate which of the two nodes
previously identified would be appropriate for a hotel. Due to the COVID-19 pandemic and
economic shift in the tourism industry, it was important to reassess the local and regional
market and determine the most viable location for a hotel.
The objectives of this study were to:
• Determine if there is a market and economic opportunity to develop a hotel in Pickering;
• Determine the ideal hotel in terms of facilities and amenities based on market demand;
and,
• Project the potential property’s topline and financial performance over a 5-year period.
In order to complete the analysis, CBRE undertook the following steps:
• A review of the economic and travel conditions affecting the demand for
accommodation in the market area;
• A review of the existing accommodation market in region, including an assessment of
the existing facilities and the market demand segmentation;
• A review of typical site selection criteria to assess the two location nodes for
consideration within the City, evaluating their suitability for a hotel development from a
market perspective;
CAO 04-22 May 24, 2022
Subject: Accommodation Needs Study Page 3
• A recommendation as to the size, facilities, amenities and branding options for a
proposed hotel development;
• An estimate of future growth in supply of, and demand for, hotel accommodation in the
competitive market area;
• A discussion on the project’s viability, including the level of investment which could be
supported by the proposed hotel; and,
• Documentation of study research, findings, and conclusions.
The study highlights the economic outlook in Canada, Ontario, the Greater Toronto Area
(GTA) and Pickering. These components included research of the economy, employment and
job growth, population, central banks and interest rates, and the residential housing market.
Another key component is the tourism industry. Despite the decline in tourism throughout the
COVID-19 pandemic, tourism is expected to rapidly increase in 2022 and reach pre-pandemic
levels by 2025.
The study also reviews the major projects in the City including Durham Live, Seaton, Pickering
Nuclear Generating Station (PNGS) decommissioning, and identifies how they are future
demand generators for Pickering. Often times, major projects or developments require the
services of businesses and organizations outside of the City, resulting in a need for
accommodation when there are long-term projects. With the City’s downtown identified as an
urban growth centre and all the future growth expected, this market overview concludes
Pickering has a strong economic foundation to build on.
As part of the tourism industry, there are many events, tournaments, weddings, and
conferences that attract foreign and domestic travelers. The City of Toronto’s tourism growth is
largely due to hosting several sporting events and major conventions, as well as the low
Canadian dollar attracting increasing volumes of international travelers. Similarly, Pickering
hosts a variety of attractions; The Pickering Museum Village, Pickering’s Waterfront, Nautical
Village, community events, and sporting events at the Chestnut Hill Developments Recreation
Complex, Pickering Soccer Centre, and outdoor baseball fields. Venues like these also
generate a demand for a hotel.
The study also looks at various development considerations for a hotel in Pickering. Those
considerations include location access, visibility, proximity to demand generators and proximity
to other amenities. These factors were reviewed against Pickering’s City Centre and the
Pickering Innovation Corridor. The City Centre re-development is currently deferred until
further notice, however, the project will create a more vibrant and community oriented
downtown in Pickering. The Pickering Innovation Corridor, located along the south side of
Highway 7, is zoned for prestige employment uses and will support the creation of high-tech
jobs in a variety of industries.
Based on the economic outlook in the region, the growth in the tourism industry and location,
the Pickering Innovation Corridor has potential for future hotel demand. However, because full
development of the area is not estimated to be completed for another 10-12 years, this node is
not an ideal location for a hotel development until the full build-out of the Seaton community.
CAO 04-22 May 24, 2022
Subject: Accommodation Needs Study Page 4
Pickering’s City Centre meets all current requirements and demands in Pickering. Analyzing
the population, location access, visibility, proximity to corporate and leisure demand
generators, shopping centres, dining and entertainment, and public transportation, CBRE
recommends the City Centre as the most viable location for a hotel development in Pickering.
The study further defines the type of hotel to be developed that would accommodate
Pickering’s needs. It is recommended that the hotel product type be a branded, 120-unit
focused-serviced hotel. This would include well-known hotel brands such as Hyatt Place, Tru
by Hilton, Aloft and others alike. Branded hotels can offer a variety of amenities for both
business and leisure patrons such as guest rooms, workspace, high-speed internet, food,
meeting rooms, and banquet space. CBRE expects this hotel would require between 2-2.5
acres of land and based on traditional financial modeling, an investment of this type is
estimated to be over $20 million. Upon development, the expected occupancy in Year 1 is
projected to be 70.6%, increasing to 74.2% in Year 3, and is estimated to remain at this level
for the balance of the projection.
In conclusion, through the detailed research and analysis provided by CBRE’s Accommodation
Needs Study, Pickering’s City Centre is the most suitable location for a hotel development at
this time. It is in close proximity to demand generators, has good visibility, ease of access to
transportation and amenities, nearby shopping centres, and generates great investment
opportunities for the city. It is therefore recommended that City staff enhance investment
attraction opportunities, as part of the investment attraction program, for a hotel development
in Pickering’s City Centre to accommodate the needs of a growing population and tourism
industry.
The results of this report presume current and projected economic data, a steady growth in the
market and the status of the market, as at January 1, 2025.
Attachments:
1. Accommodation Needs Study
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Taaha Javed Fiaz Jadoon, Ec.D., CEcD, MPM
Economic Development & Strategic Projects
Associate
Director, Economic Development &
Strategic Projects
TJ:tj
CAO 04-22 May 24, 2022
Subject: Accommodation Needs Study Page 5
Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Chief Administrative Officer
ACCOMMODATION
NEEDS STUDY
CBRE HOTELS
VALUATION & ADVISORY SERVICES
Attachment #1 to Report CAO 04-22
PROPOSED PICKERING HOTEL
PICKERING, ONTARIO
FILE NO. 21-APPRHOTELS-0083
EFFECTIVE DATE: JANUARY 1, 2025
CBREIHotels
CBRE Limited
Valuation & Advisory Services
145 King St. W., Suite 1100
Toronto, ON, M5H 1J8
416 362 2244 Tel
416 362 8085 Fax
www.cbre.ca
CBRE File No. 21-APPRHOTELS-0083
January 28, 2022
City of Pickering
One The Esplanade
Pickering, ON, L1V 6K7
Attn: Taaha Javed,
Economic Development & Strategic Projects
Associate
RE: Proposed Pickering Hotel, Pickering, Ontario
Dear Mr. Javed:
In accordance with the terms of our engagement, CBRE Limited has completed an update of the
Accommodation Needs Study for a proposed hotel in Pickering, originally undertaken in March 2017. At this
time the City of Pickering (the ‘Client’), is looking to understand the economic viability of new hotel
development in Pickering with an interest in attracting third party developers should new hotel development
be economically feasible.
The purpose and intended use of this report is to determine the level of market and economic support for a
potential hotel development within Pickering, Ontario. This report has been prepared solely for the internal
decision-making purposes of the Client. This report cannot be relied on for financing or investment purposes.
This report may be distributed by the City of Pickering to qualified interested parties. The intended use of the
report is to assist the Client, in attracting potential hotel/accommodation investment. As the conclusions
offered in this report are preliminary in nature and are subject to change should a specific site and hotel
development program be identified; the report cannot be relied upon, by any person or entity other than the
Client, without the express prior written consent of CBRE, and the individual(s) who authored the Advisory
Report.
The projections are based on a review of market information and interviews with market participants. The
entire study, including all findings and conclusions, pertains to the competitive market area and is based on
our knowledge and information with respect to current and projected economic data, expected growth in the
supply of and demand for hotel accommodation, proposed construction of facilities, which could be deemed
to be competitive, and the status of the competitive market as at January 1, 2025. Our conclusions as
presented in this report are reflective as of this fieldwork date.
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
As in all studies of this type, the projected operating results are based on competent and efficient
management and presume no significant change in the competitive position of the accommodation industry
in the immediate area except as set forth in this report. The estimates are subject to uncertainty and variation,
and we do not represent them as results that will be achieved. They have, however, been conscientiously
prepared on the basis of available information and our experience in the industry.
As of the date of value and the date of this report, the nation, region, and market area are impacted by the
COVID-19 pandemic. This could have a prolonged effect on macroeconomic conditions, though at this time
the length of duration is unknown. The perceived impact on real estate varies on several factors including
asset class, use, tenancy, and location. Our analysis considers available information as of the date of this
report.
If you have any questions concerning the analysis, or if CBRE Limited can be of further service, please contact
us.
Respectfully submitted,
CBRE Limited
Fran Hohol, CMC
Senior Director
CBRE Limited
Valuation & Advisory Services
Phone: (647) 943-3743
Email: fran.hohol@cbre.com
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
TABLE OF CONTENTS
1 INTRODUCTION ...............................................................................................3
2 MARKET OVERVIEWS .........................................................................................6
3 DEVELOPMENT OVERVIEW ............................................................................. 23
4 COMPETITIVE MARKET .................................................................................... 29
5 PROPERTY PERFORMANCE .............................................................................. 42
6 IMPLICATIONS ............................................................................................... 52
ADDENDA
INTRODUCTION
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
INTRODUCTION
In March 2017, CBRE Hotels was retained by the City of Pickering to undertake an Accommodation Needs
Study to assess the market and economic potential for a hotel development in Pickering, Ontario. In
December 2021, the City retained CBRE Hotels to update the 2017 study, given the growth the City has
experienced in the last five years and the numerous plans for future expansion.
It is our understanding that the City of Pickering is interested in assessing the market and economic potential
for a hotel development with the objective of attracting third party development interest in the development
if the project is warranted.
This report presents the research and analysis with respect to the development of a proposed hotel. The
analysis herein has assumed an opening date for a proposed hotel of January 1, 2025.
The objectives of this study have been to:
• Determine if there is a market and economic opportunity to develop a hotel in Pickering,
• Determine the ideal product in terms of facilities and amenities based on market demand, and
• Project the potential property’s topline and financial performance over a 5-year period.
In order to complete the analysis, CBRE has undertaken the following steps:
• A review of the economic and travel conditions affecting the demand for accommodation in the
market area,
• A review of the existing accommodation market in region, including an assessment of the existing
facilities and the market demand segmentation,
• Interviews with local and regional stakeholders,
• A review of typical site selection criteria to assess the two location nodes for consideration within the
City, evaluating their suitability for a hotel development from a market perspective,
• A recommendation as to the size, facilities, amenities and branding options for a proposed hotel
development,
• An estimate of future growth in supply of, and demand for, hotel accommodation in the competitive
market area,
• Preparation of room night demand by market segment, occupancy and Average Daily Rate (ADR)
projections for a proposed hotel over the projection period of January 1, 2025 to December 31,
2029, based on the recommended facilities, and market orientation,
• Average daily room rate projections for the subject proposed hotel, over the projection period,
• Preparation of a pro forma operating statement for the project commencing January 1, 2025,
INTRODUCTION 4
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
• A discussion on the project’s viability, including the level of investment which could be supported by
the proposed hotel, and
• Documentation of study research, findings, and conclusions.
LIMITING CONDITIONS
The Limiting Conditions for this reported have been included in Appendix “A”.
Important Warning -Material Valuation Uncertainty from Novel Coronavirus
The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a
“Global Pandemic” on the 11th March 2020, is causing heightened uncertainty in both local and global
market conditions. Global financial markets have seen steep declines since late February 2020 largely on
the back of the pandemic over concerns of trade disruptions and falling demand. Many countries globally
have implemented strict travel restrictions and a range of quarantine and “social distancing” measures.
Market activity is being impacted in most sectors. As at the valuation date, we consider that we can attach
less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the
current response to COVID-19 means that we are faced with an unprecedented set of circumstances on
which to base a judgement.
Our valuation(s) is / are therefore reported on the basis of ‘material valuation uncertainty’. Consequently,
less certainty – and a higher degree of caution – should be attached to our valuation than would normally
be the case. Values may change more rapidly and significantly than during standard market conditions.
Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that
you keep the valuation of the subject under frequent review.
The uncertainty around COVID-19 is having a direct impact on the real estate market. The full scale of the
impact is currently unknown and will largely depend on both the scale and longevity of the pandemic. Our
valuation is based on the information available to us at the date of valuation. Whilst we have taken all
reasonable steps to estimate the effect on the property, due to the significant uncertainty in the property,
capital markets and the rapid unfolding of these events, it is difficult to quantify and assess the impact that
the pandemic has had on capital values for this type of property. Caution is strongly advised when relying
on this valuation.
INTRODUCTION 5
MARKET OVERVIEWS
-
-
-
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
NATIONAL ECONOMIC OUTLOOK
Next 5 Years, 2020 – 2025
Canada, Q3 2021
Key Findings
GDP Growth • Economy: The economy in Canada is forecast to grow at an annual average
rate of +3.2% over the next five years from 2020 – 2025. Relative to the G7
countries, this ranks Canada’s real GDP growth at #3 among the major
developed nations.
• Employment & Job Growth: Total employment is expected to grow by +1.9
million jobs over 2020 – 2025, for an annual average growth rate of +2.1%.
This ranks employment growth in Canada as #1 among the G7 countries.
Country 5 Yr
CAGR Rank
United Kingdom 3.7% 1
United States 3.3% 2
Canada 3.2% 3
France 3.1% 4
Italy 2.8% 5
Germany 2.2% 6
Japan 1.7% 7
G7 Median 3.1% -
Employment Growth The unemployment rate is projected to compress from 9.6% in 2020 to 6.1%
by 2025.
• Population: The population in Canada is projected to grow at an annual
average rate of +1.0% over the next five years from 2020 – 2025. During
this period, Canada’s population growth ranks #1 among the G7 countries.
• Central Banks & Interest Rates: The Bank of Canada’s policy interest rate is
expected to remain flat through most of 2022 before rising steadily to as high
Country 5 Yr
CAGR Rank
Canada 2.1% 1
United States 1.8% 2
United Kingdom 1.0% 3
France 0.8% 4
Italy 0.6% 5
Germany 0.3% 6
Japan 0.2% 7
Median 0.8% -
Population Growth
as 1.75% by the end of 2025. Over the same five-year period, the Canada
10-Year bond yield is projected to rise to an average of 2.71% in 2025.
• Residential Housing Market: Housing starts in Canada are forecast to
average 232,300 units each year from 2020 – 2025, up 14.0% from the
historical ten-year average.
Country 5 Yr
CAGR Rank
Canada 1.0% 1
United States 0.4% 2
United Kingdom 0.3% 3
France 0.3% 4
Germany 0.1% 5
Italy -0.2% 6
Japan -0.4% 7
Median 0.3% -
Key Economic Indicators - Canada
2019 2020 2021F 2022F 2023F 2024F 2025F
Real GDP ($2012 millions) $2,102,304 $1,990,610 $2,094,421 $2,192,147 $2,253,287 $2,287,118 $2,326,826
Annual Growth (%) 1.9% -5.3% 5.2% 4.7% 2.8% 1.5% 1.7%
Total Employment (000s) 18,979.2 18,004.5 18,856.1 19,438.4 19,673.5 19,820.3 19,953.9
Annual Growth (%) 2.2% -5.1% 4.7% 3.1% 1.2% 0.7% 0.7%
Unemployment Rate (%) 5.7% 9.6% 7.6% 6.7% 6.3% 6.2% 6.2%
Household Income per Capita ($) $87,649 $96,472 $93,974 $95,441 $98,342 $101,394 $104,465
Population (000s) 37,601.2 38,037.2 38,284.6 38,694.3 39,102.6 39,509.1 39,913.5
Annual Growth (%) 1.4% 1.2% 0.7% 1.1% 1.1% 1.0% 1.0%
Total Housing Starts (units) 208,290 218,970 274,390 229,970 222,500 219,200 215,440
Retail Sales ($ millions) $613,980 $586,736 $630,448 $678,032 $713,520 $742,782 $772,327
Annual Growth (%) 1.2% -4.4% 7.4% 7.5% 5.2% 4.1% 4.0%
Inflation % 2.0% 0.7% 3.1% 2.8% 2.4% 2.4% 2.3%
F = Forecast data. Forecast completed October 26, 2021.
Source: Oxford Economics 2021.
MARKET OVERVIEWS 7
National Investment Adivity by Quar1er
lm"""1ent\folurn,s{S8)
516.0
515.0
512-0
59.0
56.0
53.0
50.0 I I
Q3 Q4 QI Q2 (l3 Q4 QI Q2 Q3 Q4 QI Q2
2018 2019 2020 2021
Historical National Investment Adivity by Year
T ltllSOdians I,_ V~ims (SB)
3,000 SSOD
2,500 S40D
2,000
1,500
1,000
500
0
SllD
Cop""'
IQO%
9il%
8.0%
7-0%
6il%
Sil%
-Single As,,! & Portfolio Volumes -M&A Volome, -1,"""°entVolurrE> -HI 2111 1 --lklimA"''"!J'~irle
- - -Trailing 3-Yr Average --llo.ofT•.,.,llioos
Key Capital Markets Indicators
Q-o-Q Y-o-Y
Metnc Amount Change Change
Cu..-Quarte,
Investment Volume Sl4.0B +29.3% +149.2 %
T ronsoctions Und.,,-$20M $798 +17.9% +106.4%
T ronsactions Over $20M $6.18 +47.5% +239.9%
T rcnscctions-(Count) 2,550 +15.2% +79.3%
Year-to-Dale
Investment Volume 524 .86 +62.6%
T ronscctions (Count) 4,763 +51 .8%
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
National Investment Overview
• Canada broke its all-time record for investment activity in Q2 2021. Organic, non-Merger
& Acquisition (M&A) investment volumes totaled $14.0 billion over 2,550 transactions in
the second quarter. Including M&A activity, this marked the third largest investment volume
total on record. Investment activity has built over the first half of 2021 due to significant
capital backlogs, a growing pipeline of property listings, and an improving COVID
outlook.
• The Q2 2021 acquisition total represented a quarter-over-quarter increase of 29.3% and
an increase of 149.2% compared to the same period of last year, when COVID was first
taking hold of the country. The second quarter results also marked the fourth consecutive
quarter of non-M&A volume growth for the nation, a strong indicator of rising conviction
across the investment landscape.
• Based on first half activity levels, the country is on pace to reach a full-year investment total
of $49.6 billion in 2021. If achieved, this would represent the largest annual investment
total ever, surpassing the previous record set in 2018.
MARKET OVERVIEWS 8
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
The Canadian Tourism Industry
The ultimate effect that COVID-19 will have on Canada’s tourism industry will largely depend on both the
scale and longevity of the pandemic coupled with a high vaccine uptake – both in Canada and abroad.
At this stage, accommodations, food and beverage, airlines, and retail have all been severely impacted, due
to the increased response by local and global authorities, including travel and gathering restrictions and
border closures. While Canada’s economy is regaining strength, the hospitality and tourism sector continues
to require government support through such programs as the Tourism Relief Fund.
Total Tourism Expenditures ($B) -Current Conditions
$110
$100
$90
$80
$70
$60
$50
$40
To put this in context, Canada hosted 121.4 million overnight visitors in 2019, of which 79% were comprised
of domestic visitors, while US visitors accounted for 14% and overseas travellers, 8%. Canada’s total tourism
expenditures reached $105 Billion in 2019. In 2020, tourism expenditures declined by close to 50% to $53.4
Billion and in 2021 Destination Canada is forecasting a further decline to $51.1 Billion, before increasing to
$82.6 Billion by 2022, when limited spending by the US and overseas markets will likely start to build back.
Positive travel intentions, vaccination rates in Canada and the US, the lifting of Canada’s border restrictions
to fully-vaccinated travellers, Canada’s overall economic recovery and elevated household savings with
increased spending on services like travel, all point to reasons for optimism and a recovery to 2019 levels by
2025.
Canadian Tourism Expenditures Forecast 2021-2025
2019 2020 2021 2022 2023 2024 2025
Domestic International
Source: Destination Canada, Statistics Canada
To
u
r
i
s
m
E
x
p
e
n
d
i
t
u
r
e
s
(
$
B
)
2019 2020 2021 2022 2023 2024 2025
■ ■
CBREIHotels
Total ($B) $105.1 $53.4 $51.1 $82.6 $94.4 $101.3 $105.2
% Change -49.2% -4.3% 61.6% 14.3% 7.3% 3.8%
Domestic $82.0 $49.4 $49.0 $73.2 $80.1 $82.3 $83.3
% Change -39.8% -0.8% 49.4% 9.4% 2.7% 1.2%
US $11.4 $2.2 $1.3 $5.0 $7.0 $9.6 $10.9
% Change -80.7% -40.9% 284.6% 40.0% 37.1% 13.5%
Overseas $11.7 $1.8 $0.8 $4.4 $7.2 $9.4 $11.0
% Change -84.6% -55.6% 450.0% 63.6% 30.6% 17.0%
Source: Destination Canada, Statistics Canada
MARKET OVERVIEWS 9
-
-
CBREIHotels
PROPOSED PICKERING HOTEL
PROVINCIAL ECONOMIC OUTLOOK
Next 5 Years, 2020 – 2025
Ontario, Q3 2021
Key Findings
• Economy: The economy in Ontario is forecast to grow at an annual
average rate of +3.0% over the next five years from 2020 – 2025. Relative
to the other tracked provinces, this ranks Ontario’s real GDP growth at #3
in Canada.
• Employment & Job Growth: Total employment is expected to grow by
+835,700 jobs over 2020 – 2025, for an annual average growth rate of
+2.3%. This ranks employment growth in Ontario as #2 among the
tracked Canadian provinces. The unemployment rate is projected to
compress from 9.6% in 2020 to 5.9% by 2025.
• Population: The population in Ontario is projected to grow at an annual
average rate of +1.1% over the next five years from 2020 – 2025. This
ranks population growth in Ontario as #3 among the tracked Canadian
provinces.
• Local Industries: Ontario’s largest industry by GDP is the Finance,
Insurance, and Real Estate (FIRE) industry which accounts for 28.0% of total
GDP. The next largest industries are the manufacturing and professional,
scientific & technical services industries, which respectively represent 11.0%
and 7.4% of total GDP.
• Residential Housing Market: Housing starts in Ontario are forecast to
JANUARY 1, 2025
GDP Growth
Province 5 Yr
CAGR Rank
Alberta 4.2% 1
Saskatchewan 3.4% 2
Ontario 3.0% 3
British Columbia 2.9% 4
Manitoba 2.8% 5
Median 2.8% -
Canada 3.1% -
Employment Growth
Province 5 Yr
CAGR Rank
Alberta 3.0% 1
Ontario 2.3% 2
British Columbia 2.1% 3
Saskatchewan 1.9% 4
Manitoba 1.8% 5
Median 1.8% -
Canada 2.0% -
Top 5 Local Industries
Industry % of
GDP
FIRE 28.0%
Manufacturing 11.0%
Prof., Sci. & Tech. 7.4%
Public Administration 7.4%
Construction 7.2%
average 91,679 units each year from 2020 – 2025. Singles construction is expected to
account for 29.3% of the units while multiples account for 70.7%.
MARKET OVERVIEWS 10
CBREIHotels
PROPOSED PICKERING HOTEL
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Key Economic Indicators - Ontario
2019 2020 2021F 2022F 2023F 2024F 2025F
Real GDP ($2012 millions) $747,589 $710,044 $757,584 $789,697 $789,106 $809,612 $823,284
Annual Growth (%) 2.1% -5.0% 6.7% 4.2% 1.1% 1.4% 1.7%
Total Employment (000s) 7,375.0 7,026.1 7,353.8 7,609.2 7,685.6 7,768.4 7,861.8
Annual Growth (%) 2.8% -4.7% 4.7% 3.5% 1.0% 1.1% 1.2%
Unemployment Rate (%) 5.6% 9.6% 8.0% 6.0% 6.0% 6.0% 5.9%
Household Income per Capita ($) $49,805 $52,223 $53,349 $54,250 $55,374 $56,597 $57,826
Population (000s) 14,519.6 14,720.0 14,806.5 14,967.4 15,152.0 15,340.8 15,533.5
Annual Growth (%) 1.7% 1.4% 0.6% 1.1% 1.2% 1.2% 1.3%
Total Housing Starts (units) 68,985 80,753 99,087 91,831 89,421 89,132 88,924
Retail Sales ($ millions) $231,390 $222,261 $243,497 $251,903 $255,800 $262,678 $269,731
Annual Growth (%) 2.3% -3.9% 9.6% 3.5% 1.5% 2.7% 2.7%
CPI (2002 = 1.00) 1.37 1.38 1.43 1.47 1.50 1.53 1.56
Annual Growth (%) 1.9% 0.6% 3.2% 2.6% 2.2% 2.0% 2.1%
F = Forecast data. Forecast completed September 1, 2021.
Source: The Conference Board of Canada, 2021.
Ontario Tourism Overview
In August 2021, the Conference Board of Canada released the most recent Travel Market Outlooks for the
year end 2019 to year end 2023 period. The projections for Ontario are summarized below.
Provincial Travel Market Outlook
Ontario 2019 2020e 2021f 2022f 2023f
Total ('000s overnight province visits) 45,663 24,443 31,338 41,167 47,184
1 -3.1 -46.5 28.2 31.4 14.6
Domestic 35,454 23,027 27,069 33,753 37,454
2 -5.7 -35.1 17.6 24.7 11.0
Business 2,759 1,109 1,420 1,982 2,417
3 -2.5 -59.8 28.1 39.5 22.0
Pleasure 13,622 10,948 12,561 14,513 14,943
4 -1.3 -19.6 14.7 15.5 3.0
United States 6,739 901 3,763 5,748 6,739
5 3.7 -86.6 317.8 52.8 17.2
Overseas 3,470 516 506 1,666 2,990
6 14.5 -85.1 -1.8 229.0 79.5
Total Expenditures ($ millions overnight) 17,508 6,521 9,879 14,484 17,958
7 2.2 -62.8 51.5 46.6 24.0
Travel Price Index 1.7 -5.7 3.1 3.0 2.1
Source: The Conference Board of Canada, TMO Indicators August 2021
• It is projected that total visits to the province will have declined by 38.3 percent in 2020, with total
visits falling from 131 million in 2019 to 81 million in 2020. Overnight visits are estimated to have
dropped by 46.5 percent to 24.4 million in 2020.
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• Total expenditures will recover slightly faster than will visits, as tourism prices are likely to increase in
the wake of the pandemic. In many cases, these price increases will be essential to the survival of
many firms, as the tourism industry was heavily impacted by the pandemic.
• Tourism’s recovery in the province faces a long road ahead, but wide distribution of vaccines will
allow traveler confidence to recover. Pent-up demand for travel may manifest itself in increased travel
activity in the latter half of 2021. The first requirement was the development of a safe, trusted, and
widely available vaccine.
• Some of the changes in travel patterns brought about by the pandemic, including a preference for
near drive-to visits, could be long-lasting. U.S. and overseas travel to the province will not reach pre-
pandemic levels even by 2024.
• Business travel declined by 59.8 percent in 2020, falling much more than pleasure visits. Virtual
meetings, now a necessity, may turn into a preferred method of business communication even after
the pandemic subsides.
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LOCAL ECONOMIC OUTLOOK
Greater Toronto Area Overview
The Greater Toronto Area (GTA) is Canada’s largest
urban region in terms of the size of its population and
its economy. Built on strong foundations that include
world-renowned educational and health institutions,
a diversity of internationally competitive sectors and
clusters, and a highly skilled, well-educated and
growing population, the region draws people and
investment from around the world. The GTA includes
the City of Toronto plus four surrounding regional
municipalities, which are comprised of 25 local
municipalities—including Pickering—(of which 9
have populations greater than 100,000).
Toronto is Canada’s financial and industrial centre.
Toronto remains the major centre for corporate headquarters of North American Fortune 500 global
companies, and a broad range of industries supports its economy. Additionally, Toronto is home to the
Toronto Stock Exchange, Canada’s largest stock exchange and the
GDP Growth second largest in North America.
With a population of over 5.96 million people, the Toronto Area is
Canada’s largest retail market, representing $66.7 billion. It is also
within one-day’s drive of more than 40% of the U.S. business and
consumer market.
Gre ater Toronto Area, ON, Q3 2021
City 5 Yr
CAGR Rank
Vancouver, BC 3.2% 6
Winnipeg, MB 3.1% 7
Toronto, ON 3.1% 8
Victoria, BC 3.1% 9
Quebec City, QC 3.0% 10
Median 3.1% -
Canada 3.1% -
Key Findings Employment Growth
• Economy: The economy is forecast to grow at an annual
average rate of +3.1% over the next five years from 2020 –
2025. Relative to the rest of Canada, this ranks Toronto’s real
GDP growth at #8 among the major tracked Canadian metro
areas.
• Employment & Job Growth: Total employment is expected to
grow by +406,800 jobs over 2020 – 2025, for an annual Top 5 Local Industries
average growth rate of +2.4%. This ranks employment growth
in Toronto, ON as #7 among the major tracked Canadian
metro areas. The unemployment rate is projected to compress
from 10.8% in 2020 to 6.4% by 2025.
City 5 Yr
CAGR Rank
Hamilton, ON 2.9% 5
Ottawa, ON 2.7% 6
Toronto, ON 2.4% 7
Regina, SK 2.4% 8
Victoria, BC 2.3% 9
Median 2.4% -
Canada 2.0% -
Industry % of
GDP
5 Yr
CAGR
FIRE 33.3% 2.8%
Manufacturing 10.2% 3.6%
Prof., Sci & Tech 9.3% 3.2%
Wholesale Trade 7.5% 3.0%
Construction 6.2% 1.3%
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• Population & Immigration: The population in Toronto, ON is projected to grow at an
annual average rate of +1.5% over the next five years from 2020 – 2025. During this
period, the metropolitan area is expected to receive 565,515 new immigrants, ranking
#1 among the major tracked Canadian metro areas.
• Local Industries: Toronto’s largest industry by GDP is the FIRE industry which accounts
for 33.3% of total GDP. The next largest industries are the manufacturing and
professional, scientific & technical services industries, which respectively represent
10.2% and 9.3% of total GDP. Over the next five years, the fastest growing industries
are expected to be the arts, entertainment and recreation (+13.6% annually),
accommodation and food services (+11.1%) and the transportation & warehousing
industries (+6.0%).
• Residential Housing Market: Housing starts in Toronto, ON are forecast to average
41,060 units each year from 2020 – 2025. Singles construction is expected to account
for 16.3% of the units while multiples account for 83.7%.
Key Economic Indicators - Toronto
2019 2020 2021F 2022F 2023F 2024F 2025F
Real GDP ($2012 millions) $381,668 $362,611 $386,630 $403,180 $408,417 $415,005 $422,594
Annual Growth (%) 2.1% -5.0% 6.6% 4.3% 1.3% 1.6% 1.8%
Total Employment (000s) 3,385.7 3,221.8 3,360.0 3,516.9 3,537.9 3,581.7 3,628.6
Annual Growth (%) 3.8% -4.8% 4.3% 4.7% 0.6% 1.2% 1.3%
Unemployment Rate (%) 6.1% 10.8% 9.7% 7.1% 6.6% 6.5% 6.4%
Household Income per Capita ($) $51,352 $51,743 $52,893 $53,933 $54,831 $56,031 $57,212
Population (000s) 6,462.8 6,555.2 6,637.7 6,736.1 6,847.0 6,961.2 7,076.0
Annual Growth (%) 2.0% 1.4% 1.3% 1.5% 1.6% 1.7% 1.6%
Total Housing Starts (units) 30,462 38,587 37,386 42,416 42,046 41,820 41,630
Retail Sales ($ millions) $96,220 $88,757 $95,966 $100,259 $102,028 $104,919 $107,857
Annual Growth (%) 3.6% -7.8% 8.1% 4.5% 1.8% 2.8% 2.8%
CPI (2002 = 1.00) 1.40 1.40 1.44 1.48 1.51 1.54 1.57
Annual Growth (%) 2.0% 0.3% 2.6% 2.6% 2.2% 2.0% 2.1%
F = Forecast data. Forecast completed September 1, 2021.
Source: The Conference Board of Canada, 2021.
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City of Pickering Overview
The City of Pickering is part of Durham Region, situated in the
eastern portion of the GTA beyond the eastern limits of Toronto.
Pickering borders Uxbridge to the north, Ajax to the east, and
Lake Ontario to the south.
Durham Region is currently experiencing rapid growth.
According to Envision Durham and the Durham Region Official
Plan, the region expects to double in population over the next
30 years. In 2020, Durham Region was home to approximately
700,000 people and the region expects to grow to 1.3 million
people by 2051 with over 460,000 jobs. According to the City
of Pickering’s Detailed 20-Year Population Forecast, Pickering’s
population is currently approximately 91,000 people and is
expected to grow to 124,445 by 2030.
Pickering Population, Households and Employment
2020 2023 2025 2030
Urban 90,670 98,433 110,209 120,071
South Urban 88,458 91,626 98,137 102,485
Seaton Lands 2,213 6,807 12,072 17,586
Rural 4,271 4,260 4,327 4,374
Total City 94,941 102,693 114,536 124,445
Source: City of Pickering Detailed 20-Year Population Forecast 2021
Both downtown Pickering and downtown Oshawa have been identified as urban growth centres and are
expected to function as the dominant centres within the region. According to the City’s Official Plan (2020),
urban growth centres such as Pickering will be planned as focal areas for institutional, region-wide public
services, major office, commercial, recreational, cultural, entertainment, and residential uses and will serve
as major employment centres to support higher order transit services. In terms of population, this equates to
a minimum density target of 200 persons and jobs combined per gross hectares.
Access
Pickering is easily accessible from east, west, and north (bordered in the south by Lake Ontario).
Transportation infrastructure includes Highways 401, 407, 412, 418, 2, and 7. The GO Transit System links
Pickering by bus and rail with Toronto, Hamilton, Oshawa, and substations in between. The Durham Region
Transit Authority provides regular bus service within and between the cities of Scarborough, Ajax, Pickering,
Whitby, Oshawa, Clarington, Brock, Scugog, and Uxbridge. Toronto Pearson International Airport lies
approximately 50 km from Pickering City Centre. There are five U.S. border crossings within one day’s drive
of Pickering, as well as access to the deep seaport and Executive Airport in Oshawa.
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The Lakeshore East GO line’s extension to Bowmanville was approved last year and geotechnical work is
currently underway to prepare for the expansion. To support the region’s growth the Regional Council is also
in support of extending GO rail service to Uxbridge and the large residential Seaton community currently
under development.
The following table shows the driving distance from Pickering to major urban centres.
Access to Major Markets – City of Pickering
Buffalo, New York 168
Gananoque, Ontario 251
Niagara Falls, Ontario 169
Sarnia, Ontario 317
Detroit, Michigan 399
Downtown Toronto, Ontario 39
Source: City of Pickering
Economy & Employment
With over 2,800 businesses, Pickering’s key business sectors include Advanced Manufacturing, Agri-Business,
Innovative Technology (IT), and Energy, Environment and Engineering (EN3). The following table shows
major players in each of Pickering’s key sectors.
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Market Distance (km)
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Advanced
Manufacturing Agri Business Innovative Technology EN3
Kubota Canada Joriki Beverages RBRO Solutions Intellimeter Canada
PCC Aerostructures Derlea Brand Foods Search Engine People Kinectrics
Aspect Retail
Logistics GroundLevel Insights Ontario Power
Generation
Signature Aluminum RCM Technologies
Additional key businesses in the EN3 sector includes Aecon Group, Argus Industries, Black & McDonald,
Chemetics, Eco-Tec, EMC Power Canada, Green for Life (GFL), Hydro One, Trench Canada, Tetra Tech, and
Veolia Environmental Services, among others.
Major employers in the City of Pickering are detailed below.
City of Pickering Major Employers
Public Sector
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Ontario Power Generation Rogers Communication
MPAC (Municipal Property Assessment Corp) Aspect Retail Logistics
City of Pickering Pickering Casino Resort
Trench Ltd.
Yorkville Sound
Signature Aluminum Canada Inc.
Kubota Canada Ltd.
Noranco Manufacturing Ltd.
Source: City of Pickering
TOURISM OVERVIEW
Greater Toronto Area
Toronto’s tourism activity grew consecutively from 2012 to 2019, largely due to hosting several sporting
events and major conventions, and the low Canadian dollar attracting increasing volumes of international
and domestic travel. In 2020, the COVID-19 pandemic saw tourism fall drastically around the world as
governments enacted travel restrictions to slow the spread of the virus.
In August 2021, the Conference Board of Canada released the most recent Travel Market Outlooks for the
year end 2019 to year end 2023 period. The projections for Toronto are summarized below.
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City Travel Market Outlook
Toronto 2019 2020e 2021f 2022f 2023f
Total ('000s overnight city visits) 13,312 5,617 7,579 10,715 13,155
1 3.0 -57.8 34.9 41.4 22.8
Domestic 8,161 4,860 5,787 7,285 8,266
2 -2.7 -40.4 19.1 25.9 13.5
Business 1,306 362 574 831 1,051
3 8.5 -72.3 58.6 44.6 26.5
Pleasure 1,703 1,193 1,518 1,845 1,889
4 -3.6 -29.9 27.2 21.6 2.3
United States 2,693 386 1,418 2,212 2,703
5 10.6 -85.7 267.3 56.0 22.2
Overseas 2,458 371 375 1,218 2,186
6 16.8 -84.9 1.1 224.9 79.5
Total Expenditures ($ millions overnight) 6,781 2,025 2,995 4,904 6,615
7 10.0 -70.1 47.9 63.8 34.9
Travel Price Index 1.7 -6.3 2.6 2.7 1.8
Source: The Conference Board of Canada, TMO Indicators August 2021
• As shown, similar to the Provincial statistics, travel into Toronto is primarily driven by domestic
business and pleasure visitation; domestic travel comprises approximately 70% of the City’s total
visitation on an annual basis.
• Toronto’s diversified economy, world class retail and attractions, and excellent international air
connectivity make it an attractive destination for both US visitors and overseas markets. Between
these two demand sources Toronto welcomes approximately 5 million visitors each year.
• Visitation numbers are forecasted to have been drastically lower in 2020 as a result of travel
restrictions brought on during the Covid-19 Pandemic that began in March of 2020. It is expected
that visitor numbers will return near 2019 levels in 2023/2024 once travel restrictions are lifted.
Tourist sports attractions in Toronto include the Rogers Centre, home to the Toronto Blue Jays of Major
League Baseball. The Scotiabank Arena opened in February 1999 and is home to the NBA’s Toronto Raptors
Basketball Team and the NHL’s Toronto Maple Leafs Hockey Team.
In Mississauga, the Raptors 905 joined the National Basketball Associations Developmental G League in
2015, playing their home games at Paramount Fine Foods Centre. The Ontario Hockey League also has a
franchise in Mississauga, the Steelheads, who play their games from September to March at the Paramount
Fine Foods Centre as well.
Other popular tourist attractions in Toronto include the Royal Ontario Museum, Ontario Science Centre,
Ripley’s Aquarium, Canada’s Wonderland, etc. The City is considered "Hollywood North" by the film industry;
third in television and film production and second as an exporter of TV programming in North America.
Toronto offers over 8,000 restaurants and 35,000 hotel rooms as well as a large variety of shopping,
including an underground network of commercial centers. Though many of the city’s primary attractions are
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located in the downtown core; more and more tourists visiting the city are choosing to locate in the
submarkets of Toronto due either to the unavailability of hotel rooms downtown as this submarket often runs
at functional capacity (pre COVID), or as a less expensive alternative from which to base their visit.
Tourism in Pickering
The City of Pickering also offers a number of notable tourist attractions. Pickering Museum Village is a living
history village representing the early settlement and development of Pickering from 1810 to 1920. The Village
is a popular destination for school groups, events and weddings, and on-location film shoots. The Village is
currently proposing a large new development located on lands adjacent to the village. The development
would include a 40,000 square foot event facility, a food and beverage element, and museum and art
resource centres. The project is currently in the planning stages and awaiting funding with timing to be
confirmed. A rendering of the event space is pictured below.
The City is an up-and-coming film location within the GTA. In September 2021, William F. White (WFW),
Canada's largest provider of film/television equipment, became the exclusive operators of the Pickering
backlot. This backlot, which is located on 90 acres of land, features a 23-acre small town, and is the largest
film/television site in Canada. In addition to the WFW backlot and the Pickering Museum Village, popular
film locations include Pickering’s roads (both rural and urban) and a wide range of historic residential
neighbourhoods. Furthermore, Pickering is within Toronto’s Alliance of Canadian Cinema, Television and
Radio Artists (ACTRA) union’s “Active Zone” for filming, which allows the City to capitalize on film shoots
within the GTA and the overflow from larger studios in downtown Toronto. Filming has continued throughout
the COVID-19 pandemic with the permitting activity largely surrounding TV series for streaming platforms
such as Netflix, Disney, Hallmark, and the like.
Pickering is also home to numerous opportunities for outdoor recreation. The City’s waterfront allows for
swimming, hiking, and birdwatching along the shores of Lake Ontario, and Pickering’s Nautical Village
features a number of shops, restaurants, and retailers. The Frenchman’s Bay Harbour is also a popular
destination for boaters and outdoor recreation. Pickering has over 220 hectares of open space and parkland,
85 parks including a section of Rouge Park, and numerous conservation areas and hiking trails. The
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SOUTHUIIMN
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CITY OF PICKERING
• Proposed Airport
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Waterfront Trail, which stretches from Lambton Shores to Cornwall, also passes along Pickering’s waterfront.
The Waterfront Trail stretches from approximately Lambton Shores to Cornwall.
The City hosts annual fireworks shows and a Canada Day celebration with performers and vendors and an
annual Ribfest festival with games, rides, and food vendors. These celebrations were modified due to COVID-
19 however the City plans to continue them in the future.
The City of Pickering has a number of sports arenas, including the Chestnut Hill Developments Recreation
Complex, several hockey and ice-skating arenas, the Pickering Soccer Centre, and baseball fields. On an
annual basis, the City hosts several tournaments and sporting events. In conversations with the City’s
Community Services Administration and recreation, the city hosts an estimated 5 to 6 annual hockey
tournaments, one baseball tournament, several soccer tournaments, 2 to 3 lacrosse events in the summer,
and 3 swim meets. Stakeholders noted that finding accommodations for larger, multi-day tournaments is
often difficult due to the scarcity of hotels in Ajax and Pickering. Tournaments currently use hotel
accommodations in the surrounding communities of Ajax, Markham, Scarborough, and Richmond Hill.
Major Developments & Future Demand Generators in Pickering
Pickering is currently undergoing a number of
major redevelopment projects and strategic
development initiatives. The following summarizes
the major projects:
• Seaton Community Development & the
Innovation Corridor: The Seaton
development is made up of over 7,000
acres of land in the north of Pickering. The
development will include 815 acres of
employment land and 3,064 acres of living
area for residential, commercial, and
institutional uses, with the remainder
preserved as open space lands. The
development is expected to attract up to
70,000 new residents and create 35,000
new jobs. As indicated in red on the
graphic to the right, the employment land
area along the Highway 7/Highway 407 is
being called the Innovation Corridor. The
lands are in various stages of being sold,
serviced, and under construction. In
speaking with the City, approximately 170
of the 800 acres of employment lands are
earmarked to come onstream within the
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next two to three years. The City estimates that all 800 acres will be activated in 10 to 12 years.
• Pickering Airport: A 9,000-acre site adjacent to the Innovation Corridor has been designated by the
Federal government as land for a future airport, of which 3,000 to 4,000 acres would be used
specifically for the airport. The proposed airport would primarily operate as a reliever airport to
Toronto Pearson International Airport. The development has faced some opposition and is still in the
preliminary planning stages. In discussions with the City, CBRE understands this development is a
longer-term project.
• Pickering City Centre Redevelopment: Pickering’s City Centre is slated to undergo a transformation
and redevelopment, including a new performing arts centre, a relocated and expanded central
library, and a combined seniors and youth centre. The development also calls for three condominium
towers and an activated public square. This development is located next to the Pickering Town Centre
mall and is connected to the Pickering Go Station by the Guinness World Record holding pedestrian
bridge over Highway 401. The performing arts centre would include a 600-seat concert-style theatre
plus a 200-seat multipurpose theatre. Once the public square is completed, the City’s cultural
department would look to host food and music festivals in the square. At this time, project timing for
the City Centre redevelopment has not been confirmed.
• Kingston Road Intensification Project: Kingston Road runs parallel to the 401 and is a major artery
that connects Toronto to Oshawa through Scarborough, Pickering, Ajax, and Whitby. The
intensification project seeks to activate the lands to the north and south of Kingston Road with through
mixed-use developments including a combination of residential, retail, commercial, and office along
with public green space and improved pedestrian and cyclist access. This project will affect the
sections of Kingston Road immediately to the east and west of Pickering’s City Centre; intensification
along these sections includes mixed-use residential in the form of townhouse and condominium
developments with ground floor commercial space.
• Durham Live: Durham Live is a proposal for a tourist complex in south Pickering, on a 226-acre site
at the corner of Church and Bayly Streets. The Pickering Casino resort is already open, and the
adjacent 275-room hotel is expected to open by Fall 2022. Future phases of the development would
include various entertainment elements including a film studio, a Porsche experience centre, a water
park, a performing arts centre, along with several retail and food and beverage establishments. The
future phases are in planning stages currently and construction has not yet begun.
• Ontario Power Generation’s Pickering Nuclear Generating Station Decommissioning: Supported by
the Province of Ontario, OPG’s Pickering station will end commercial operations in 2025. Under
OPG’s current timelines, OPG will shut down the plant’s units 1 and 4 in 2024 and units 5 to 8 in
2025. After commercial operations cease, the station will first be placed in a safe storage state
(removal of fuel and water) and eventually decommissioned, beginning in 2028. The full
decommissioning process takes approximately 50 years. After decommissioning, the City will resume
ownership of the land. The Pickering plant uses CANDU technology, a unique nuclear reactor
technology developed in Canada, and will be one of the largest and first of its kind in the world to
be decommissioned. In speaking with OPG, they foresee visiting specialists throughout the process
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and are working closely with Pickering and region on the financial and social impacts. As the plant
is decommissioned, Pickering’s employment numbers will decrease as employees are redeployed to
OPG’s Darlington site, where a small reactor is being built. OPG, the City of Pickering, and Durham
Region are currently undertaking a Financial, Economic, and Social Impact study on the retirement
of the station.
Conclusion
The City of Pickering has a strong economic foundation and a population of approximately 91,000. The City
is expected to see population increase to 124,445 by 2030 as a result of strong residential and employment
growth. Downtown Pickering has been identified as one of 2 urban growth centres by the region and is
expected to function as a dominant centre within the region. The City has a number of major development
projects currently underway and in the planning stages and as such, the City is well positioned for future
economic growth. In addition, Pickering is located within the GTA and within easy access of both visitor and
business markets.
As the province recovers from the COVID-19 pandemic, Ontario’s economy is forecast to grow at an annual
rate of 2.6% through to 2025. Ontario’s tourism’s recovery will greatly depend on the wide distribution of
vaccines and traveler confidence. While 2021 will see tourism recover over 2020, demand will mainly be
from domestic visitation with full-scale recovery taking place in future years.
While the vaccination roll out has expanded rapidly over the last several months and case counts have come
down to levels not seen since early in the pandemic there remains various limitations on gathering sizes and
indoor dining as well as travel bubbles in some provinces heading into the winter season. The recent re-
opening of the Canada border to fully vaccinated US and International visitors should be positive for the
industry heading in 2022.
While the economic growth expectations are important, what is more important to the accommodation and
tourism sectors in Canada is the timing of recovery in business, meeting conference, and leisure travel. The
recovery in the accommodation industry in Canada will be as much about easing in travel restrictions and
gathering limits as the willingness or ability of businesses to allow employee travel. Recovery will also largely
depend on the willingness and comfort of individuals to travel for both leisure and business purposes.
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DEVELOPMENT OVERVIEW
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DEVELOPMENT OVERVIEW
Location Overview
The City of Pickering is located in the Greater Toronto Area region in Southern Ontario, approximately 40
km east of downtown Toronto. The City is located along Highway 401, a primary arterial roadway in Southern
Ontario that connects Windsor in the west to the Ontario-Quebec border in the east.
The City has a population of almost 100,000 people and major industries include Advanced Manufacturing,
Agri-Business, Innovative Technology (IT), and Energy, Environment and Engineering (EN3).
Location Considerations
When determining the optimum location and site for a hotel development, the following characteristics should
be considered.
• Access – An optimal hotel development site should be easily accessible and ideally situated in a
convenient location with easy access to and from major arterial roadways.
• Ingress/Egress – An optimal hotel site should have simple, easily accessible routes of ingress and
egress.
• Visibility – An optimal hotel development site should allow for the hotel to be oriented in such a way
that the building could be seen by traffic in all directions. It would still be necessary to supplement
the building visibility with appropriate signage along major roadways and on the building and site
itself.
• Proximity to demand generators – An optimal hotel development site should be reasonably proximate
to the local demand generators such as major businesses or industrial parks as well as recreation
and leisure attractions.
• Proximity to support amenities – An optimal hotel development site should be within walking distance
or reasonably proximate to a concentration of support amenities such as restaurants, entertainment,
and retail.
In general, leisure travelers place a higher value on having amenities within walking distance, while corporate
travelers and meeting/conference guests would expect business and industrial parks to be within a short
driving distance.
If the location characteristics for a prospective hotel development are not optimized, it would have an impact
on the proposed hotel’s ability to achieve the projections contained herein.
DEVELOPMENT OVERVIEW 24
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Development Area Review
Based on discussions with the Client, it is our understanding that there are two nodes within the City which
are seeing considerable growth and the Client believes there may be an opportunity for hotel development.
The two location nodes include:
• Pickering’s City Centre: located in downtown Pickering, the area is in the early planning stages of
a transformation with new buildings and facilities planned, including a performing arts centre, a
relocated and expanded central library, a combined seniors and youth centre, residential
condominium towers, and a public square, among others.
• Innovation Corridor: located in the Northern/Central area of Pickering between Highways 7 and
407. Zoned for prestige employment uses, the City envisions this corridor will support the creation
of high-tech jobs in a variety of industries.
The Innovation Corridor has potential for future hotel demand with the surrounding employment lands, the
proposed Airport lands, the film backlot, and the proposed event centre at the Pickering Museum Village.
However, given that timelines for the new developments in the area are currently estimated to not be
completed for 10 years, these projects would not currently generate hotel demand. Therefore, the Innovation
Corridor does not represent an ideal location for a hotel development until these projects are completed or
near completion.
The City Centre location has good access and potential visibility from Highway 401 and the Pickering GO
Station. It would also be close to local corporate and leisure demand generators, especially once the
proposed performance centre is completed. With the site located near Pickering Town Centre mall, the
location would have good access to support amenities in the immediate area such as shopping, dining, and
entertainment.
Based on these factors, CBRE recommends the City Centre location for the potential hotel development in
the near to midterm.
Development Concept
When determining the ideal product for accommodation development within the City of Pickering, the
motivations and priorities of the hotel investment and lending community were also considered along with
the market factors. Typically, if a community is going to be successful in attracting private sector hotel
investment, a comprehensive and independent third-party assessment of the opportunity is required. The
hotel investment community is exposed to a wide range of projects and has many communities soliciting their
development interest. They are looking for formal independent confirmation that a project has merit. Typical
hotel investors have several key criteria they consider when determining how/where to invest their funds, the
most important of which are:
1. Return on Investment: Return on Investment measures the gain or loss generated on an investment
relative to the amount of money invested. Hospitality property is considered to be a secondary form
of real estate investment due to its specialized nature, requirement for strong management and
higher risk associated with the income stream. Investors require a higher rate of return on hospitality
DEVELOPMENT OVERVIEW 25
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
property as compared to more traditional real estate investments. Our experience in the industry
indicates that typical hotel investors expect a return on investment in the range of 10% to 15%, far
higher than what is characteristic of other real estate classes.
2. Availability and Likelihood of Financing: The availability and cost of financing has a direct impact
on the value of a hotel, and hence hotel financing parameters play an integral role in the feasibility
of new hotels. In today’s lending environment, obtaining financing on a non-branded asset is highly
challenging. The support of large, well-known international brand mitigates the performance risk of
an asset with the premier brands almost always outperforming second tier brands or independent
hotels. In addition, the support of a large brand/reservation system and national marketing network,
also makes a hotel asset much less vulnerable to new supply. Further, when considering construction
financing on new build assets, lenders will finance on the lower of capital cost or estimated market
value ~ which directly impacts the level of equity required to move a project forward. In the most
ideal situation, capital cost and estimated market value are equal.
3. Liquidity/Exit Strategy: Both lenders and developers consider the ultimate exit strategy when
evaluating a hotel investment opportunity. Research shows that branding also helps to reduce the
liquidity risk of an asset, in the sense that there would be more potential purchasers for product
carrying strong brands that are not specific to one owner/operator/developer.
These are critical factors that influence a hotel developer’s investment decision, and these should be
considered when evaluating the opportunity for attracting accommodation development to any community.
Throughout the engagement CBRE consistently evaluated the potential for accommodation development in
the City of Pickering bearing in mind these “typical” development and investment parameters. All
recommendations, such as the size of the project, the nature of the accommodation (i.e. branded vs. un-
branded) were based on what our experience in the industry has shown would give the community the best
means for attracting an interested developer, and ensuring a development with the greatest long-term
potential for success is developed, taking into account all of the market and investment factors in the City of
Pickering.
PROPOSED FACILITY PROGRAM
Based on our review of the existing accommodation product within the competitive local and regional
markets, the historic market performance, the nature of local demand generators and the economic
operating conditions for hotels in Canada, we have recommended the following development option for a
proposed hotel in Pickering.
Our determination of the most suitable product to be considered for development was based on factors
which best meet market demand and would also lead to the greatest level of investor interest and support
from the traditional lending community. By conducting our analysis on the product type that would have the
greatest appeal to the traditional hotel investment market, this allows the City the greatest chance of attracting
a serious developer/investor with the capabilities and knowledge to develop a successful hotel operation.
DEVELOPMENT OVERVIEW 26
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Physical Description
The development recommendation is that of a branded, 120-unit focused-service hotel. Examples of brands
that could be considered for such a development include, but are not limited to Canopy, Aloft, ALT, Hyatt
Place, Tru by Hilton, and the like. In this case, branding is recommended in that it will not only enhance the
marketability of the project but will also enhance the potential for project financing.
The recommended hotel and product positioning is based on these primary factors:
• This level of hotel can appeal to a broad range of guests and types of travelers.
• The design prototypes for these brands are of strong quality.
• This level of hotel is more cost effective to develop relative to full-service level hotels but
offers guests more than limited-service hotels.
• This level of hotel is more cost effective to operate relative to full-service hotels with added
services requiring low staff levels.
• These brands are considered more “lifestyle” and would fit the urban setting of the City
Centre with the Pickering Town Centre mall and proposed performing arts centre onsite.
Hotels of this nature typically feature a variety of guestrooms, including standard one or two bedded rooms,
and a mixture of suite configurations. Guestrooms within this tier of hotels typically include amenities such as
a desk or workspace, high-speed internet and/or wireless internet access, and in-room coffee making
facilities. The proposed development program should include a variety of room types as dictated by the brand
development standards.
The main floor typically includes a comprehensive offering of amenities for both business and leisure
travelers. Services that would be available at the proposed hotel would include a 75-seat restaurant, indoor
pool, fitness centre, and 4,500 square feet of meeting space.
The inclusion of a sufficient amount of meeting space would allow the hotel to attract additional
meeting/conference business and compete effectively within the market. The proposed configuration includes
a main 3,000 square foot meeting room (capacity of 200 persons) with two smaller 750 square feet meeting
rooms to act as breakout rooms or more intimate meeting spaces for 50 persons. In conversations with the
Ajax-Pickering Board of Trade, the current regional event offerings lack breakout rooms and suitable spaces
for smaller meetings. The meeting space would be suitable to host small corporate meetings and social
gatherings, as well as larger banquets and events.
The following table outlines a possible facility program for the proposed hotel.
DEVELOPMENT OVERVIEW 27
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Proposed Hotel Facility Program
Guestrooms % of Room Mix Keys Sq. Ft./Rm Total GFA
King 25% 30 290 8,700
Queen/Queen 50% 60 325 19,500
King Suite 20% 24 360 8,640
Queen/Queen Suite 5% 6 490 2,940
Total 100% 120 350 39,780
Food & Beverage Seats Sq. Ft./Rm Total GFA
All Day Restaurant 75 16 1,875
Main Meeting Room
Br eak Out Room
Break Out Room
200
50
50
25
6
6
3,000
750
750
Fitness Room / Pool
Lobby / Public Spaces
BOH / Circulation
Total Hotel GFA
33
38
120
576
4,000
4,560
14,400
69,115
Total 75 16 1,875
Meeting/Conference Facilities Capacity Sq. Ft./Rm Total GFA
Total 300 37.5 4,500
Other Facilities Sq. Ft./Rm Total GFA
Source: CBRE Hotels
Based on our experience in the industry and knowledge of comparable hotel construction projects, the
proposed hotel development would require approximately 2.0 to 2.5 acres of land. However, it is our
understanding that the proposed City Centre development will include a large underground parking lot to
accommodate guests to the mall, seniors and youth centre, and performing arts centre. In conversations with
the City, they have indicated that the hotel could share in this underground parking lot. Therefore, if the hotel
shared in the underground parking lot and did not require a surface level parking lot, development on a
smaller site could be considered. In addition, integration of the hotel into a mixed-use development—such
as the proposed residential buildings— might also be considered, provided that cost allocations do not
negatively impact investment returns.
In terms of placement, an ideal location for the proposed hotel would offer direct visibility from the 401
Highway and GO Station pedestrian bridge, as well as easy pedestrian access, such as from the proposed
City Centre public square. If the hotel offers underground parking, walk-up pedestrian access and a port-
cochere which offers easy drop-off access will be especially important.
Conclusion
The most suitable location for a hotel development at this time would be in Pickering’s City Centre, in close
proximity to the demand generators in the area and with good visibility and ease of access from Highway
401 and the Pickering GO Station.
Based on a review of the existing hotel product, and on our research on the various sources of market
demand, a 120-room focused-service product is considered to be a good fit for the market.
DEVELOPMENT OVERVIEW 28
COMPETITIVE MARKET
65%
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CBREIHotels
I
National Accomodation Market Occupancy & Demand
1998-2020
-Occupied Room Nights --Occupancy
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PROPOSED PICKERING HOTEL
JANUARY 1, 2025
NATIONAL ACCOMMODATION MARKET OVERVIEW
The Canadian Accommodation Market and COVID-19: Lessons Learned
from Previous Demand Shocks
The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a
“Global Pandemic” on the 11th March 2020, has caused heightened uncertainty in both local and global
market conditions. Global financial markets saw steep declines beginning in late February 2020, largely on
the back of the pandemic over concerns of trade disruptions and falling demand. Many countries globally
have implemented strict travel restrictions and a range of quarantine and “social distancing” measures.
In Canada, on March 18, 2020, the Federal government implemented a ban on the entry to Canada of
foreign nationals from all countries, except the United States. At the same time, it was announced that the
Canada-U.S. border would be closed to all non-essential travel. These closures/limitations persisted for
approximately 18 months.
In looking at the Canadian accommodation market’s recovery from similar demand shocks over the last 20
or so years may provide an indication of how things could play out. The following graph presents the demand
change percentage, Average Daily Rate (ADR) and Revenue per Available Room (RevPAR) for the Canadian
Accommodation market going back to 1998.
COMPETITIVE MARKET 30
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
2019
2020·
2 021
2022
2023
2024
2025
9/11
Te rro ri st
Attacks
National Accomodation Market ADR & RevPAR Performance
1998 -2020
Grea t
SARS Finan cia l
Epid e mi c Cri sis
~7
V
■ ADR ■ RevPAR
Actual Results
0cc ADR RevPAR Supply Demand 0cc ADR RevPAR
65%
3 0 %
$163
$128
$106
$39
1 .4%
0.8 %
Outlook
1%
-48%
-1 pts
-35 pts
5 %
-2 1%
5 %
-64%
0cc ADR RevPAR Supply Demand 0cc ADR RevPAR
36% $132 $47 1.0% 2 0 % 6 pts 3 % 22%
50% $144 $72 1 .4% 42 % 14 pts 9 % 53%
59% $153 $90 2.0 % 19% 9 pt s 7 % 24%
63% $1 6 1 $102 0 .6% 8 % 4 pts 5 % 13 %
65% $166 $107 0.7% 3 % 2 pts 3 % 6 %
• 2020 performance hos been annualized to reflect total inventory
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
In 2001 after the demand shock created by the 9/11 terror attacks, accommodation demand declined by
just over 2% and returned to pre-incident levels the following year. Similarly, in 2003 with the SARS pandemic,
which was largely concentrated in Toronto, demand declined by almost 4% with occupied room nights more
than recovering in 2004. In 2008/2009, the most recent demand shock, the Great Financial Crisis (GFC)
saw demand decline by a combined 7.5% over the two-year period. While demand came back strong in
2010, it took until 2011 for occupied room night levels to pre-downturn levels.
In general, the rebound on ADR and RevPAR has lagged the demand recovery as demonstrated above. Post
9/11 and SARS, the ADR and RevPAR levels returned to pre-impact levels within 1-2 years. Following the
GFC it took more than 4 years for the national ADR and RevPAR levels to return to 2008 levels.
Taking into consideration the historic data, 2020 performance and the current COVID situation, CBRE Hotels
has prepared a projection for National RevPAR performance, as presented below.
COMPETITIVE MARKET 31
Monthly RevPAR
$140
$120
$100
$80
$60
$40
$20
$0
0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N N N N N
N N N N N N N N N N N N N N N N N N N N N N N N
C ..Q
'° 0. >-C :5 Ol n. -> u C ..Q
'° 0. >-C :5 Ol n. -> u C ..Q
'° 0. >-C :5 Ol n. -> u u "' (!) "' :::, :::, (!) u 0 (!) u "' (!) "' :::, :::, (!) 0 (!) 2 -, 0 "' (!) "' :::, :::, (!) 0 (!) -, LL 2 <( 2 -, -, <( (/) 0 z 0 -, LL <( 2 -, <( (/) z 0 -, LL 2 <( 2 -, -,
<( (/) 0 z 0
--Histor ic Baseline RevPAR (2019) --Actua l/CBRE Forecast -
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
In 2021, the National accommodation market was forecasted to see some RevPAR recovery which will be in
the range of 25%, mostly on stronger than expected occupancy. Recovery to 2019 RevPAR levels is not
expected to happen until 2025 as there is expected to be a lag in recovery of certain segments (i.e. Meeting
Conference, International Corporate & Leisure, etc.) until people are vaccinated and movement is no longer
restricted or limited. Below is the expected RevPAR recovery projection compared to a baseline (2019 actual
performance). Into 2022 the RevPAR will trend towards higher growth, but it will be into 2025 before the
curves meet.
While CBRE has prepared this projection at a national level, individual markets will recover at a varying pace
and certainly some markets are likely to see recovery sooner depending on a number of factors including
new supply. There are additional recovery influences that could affect projected results including travel
restrictions, operational shifts in the industry, economic recovery, extended physical/social distancing
requirements and ultimately, the widespread distribution of the vaccine.
COMPETITIVE MARKET 32
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$100
$80
$60
$40
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-
Ontario -Accommodation Market Demand and RevPAR
2005-2020
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-occupied Room Nights -RevPAR
CBREIHotels
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PROPOSED PICKERING HOTEL
JANUARY 1, 2025
The Regional Accommodation Market: Ontario
Looking back at the performance of the Ontario accommodation market since 2005 the impact of demand
shocks and the recovery follow a similar pattern as the national accommodation market in these same
situations.
By 2010 the occupied room night demand levels had almost completely recovered to 2008 levels however it
took until almost 2014 before RevPAR recovered to the same levels.
COMPETITIVE MARKET 33
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
COMPETITIVE ACCOMMODATION MARKET ANALYSIS
Competitive Market Identification
In order to identify hotel market trends as they relate to the potential property, information on the historic
performance has been drawn from data collected through the CBRE Hotels Trends database. On an annual
basis between 500 to 600 properties (90,000 – 110,000 rooms) provide us with their detailed operating
statements, while on a monthly basis we obtain and monitor the rate and occupancy of 2,010 properties
representing over 60% of the Canadian industry’s 465,000 rooms.
The CBRE database has been in place for 30 years. The confidentiality of individual property data is of the
utmost importance; however, we have the ability to examine the top line, operating structure and bottom-
line performance of these individual properties, and bring that knowledge to our engagements.
The following table presents the 401 Corridor competitive accommodation market for the potential hotel at
Pickering’s City Centre, from eastern Toronto to Oshawa.
Competitive Facilities - 401 Corridor
Total Meeting Meeting Space
No. Name Address Rooms Type Space (SF) per Room (SF) Re
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1 Comfort Inn Oshawa 605 Bloor St West, Oshawa 77 Limited Service --X X
2 Courtyard Oshawa 1011 Bloor Street East, Oshawa 115 Focused Service 8,481 73.7 X X X
3 TownePlace Suites Oshawa 1011 Bloor Street East, Oshawa 98 Extended Stay " 86.5 X X X X X
4 Travelodge Oshawa 940 Champlain Drive, Oshawa 114 Limited Service 1,000 8.8 X X X X
5 Holiday Inn Express Oshawa Downtown 67 Simcoe St North, Oshawa 125 Limited Service 342 2.7 X X X X
6 La Quinta Inn & Suites Oshawa 63 King Street East, Oshawa 59 Limited Service 1,260 21.4 X X X
7 Oshawa Kingsway Motel (f. Knights Inn) 695 King St E, Oshawa 25 Limited Service --
8 Best Western Plus Durham Hotel & Conference 559 Bloor St West, Oshawa 84 Focused Service 6,500 77.4 X X X
9 Quality Suites Whitby 1700 Champlain Ave, Whitby 104 Extended Stay N/A
10 Holiday Inn Express Whitby 180 Consumers Dr, Whitby 92 Limited Service N/A
11 Motel 6 Whitby 165 Consumers Dr, Whitby 124 Limited Service N/A
12 Residence Inn Whitby 160 Consumers Dr, Whitby 122 Extended Stay N/A
13 Super 8 Motel Ajax 210 Westney Rd S, Ajax 64 Limited Service N/A
14 Hilton Garden Inn Toronto Ajax 500 Beck Crescent, Ajax 134 Focused Service 3,000 22.4
15 Homewood Suites Ajax 600 Beck Crescent, Ajax 104 Extended Stay N/A
16 Comfort Inn Pickering 533 Kingston Rd, Pickering 144 Limited Service N/A
17 Travelodge Scarborough 20 Milner Business Ct, Toronto 148 Limited Service N/A
18 Days Inn Scarborough Toronto East 2151 Kingston Rd, Toronto 61 Limited Service N/A
19 Holiday Inn Express Scarborough 50 Estate Dr, Scarborough 140 Limited Service 1,104 7.9 X X X
20 Super 8 Scarborough/Toronto East 3280 Kingston Rd, Scarborough 49 Limited Service --X X X
21 Knights Inn Toronto East (f. Howard Johnson) 22 Metropolitan Rd, Scarborough 191 Limited Service N/A X X X
22 Knights Inn Scarborough (CLOSED) 4694 Kingston Rd, Scarborough 0 Limited Service --
23 Days Inn Toronto East 2151 Kingston Rd, Toronto 50 Limited Service --X
24 Delta Hotel Toronto East 2035 Kennedy Rd, Toronto 367 Full Service 21,534 58.7 X X X X
25 Radisson Hotel Toronto East 55 Hallcrown Pl, Toronto 238 Full Service 7,700 32.4 X X X X
26 Best Western Plus Executive Inn Toronto 38 Estate Dr, Toronto 95 Focused Service 600 6.3 X X X X
27 Toronto Don Valley Hotel 175 Wynford Dr, North York 354 Full Service 16,000 45.2 X X X X
28 Edward Hotel North York 185 Yorkland Blvd, North York 286 Full Service -- X X X X
Total 3,564
Source: Compiled by CBRE Hotels
As of the end of December 2020, the 401 Corridor competitive accommodation market was comprised of
28 hotels offering 3,564 rooms or 1,304,363 available room nights.
COMPETITIVE MARKET 34
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Comfort Inn Oshawa
Courtyard Oshawa
TowncPlacc Suites Oshawa
Travelodge Oshawa
Holiday I nn Express Oshawa Downtown
La Quinta Inn & Suit es Oshawa
Oshawa Kingsway Motel (f. Knights Inn]
Best Western Plus Durham Hotel &
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Holiday Inn Express Whitby
Motel 6 Whitby
Residence Inn Whitby
Super 8 Motel Ajax
Hilton Garden Inn Toronto Ajax
Homewood Suites Ajax
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T otal Competitive Mar ke t
2016 2017 2018 2019 2020 YTD NOV 2020 NOV 2021 5 Yr Growth
Rooms
Annual Occupancy
Ave r age Daily Rate
RevP AR
Av ailable Room Nights
Occ upied Room Nights
Room Revenues (000s)
3,476
64.4%
$106.15
$68.40
1,272,216
819,753
$87,018
3,492 3,376 3,387 3,564
69.5% 73.0% 70.9% 49.7%
$115.46 $119.68 $119.90 $97.65
$80.22 $87.37 $85.06 $48.49
1,274,580 1,232,240 1,236,255 1,304,363
885,619 899,532 877,042 647,793
$102,249 $107,660 $105,154 $63,254
3,564 3,564
49.3% 66.6%
$98.68 $94.42
$48.67 $62.85
1,193,913 1,190,260
588,871 792,298
$58,107 $74,808
-
-15 pts
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-29.1%
2.5%
-21.0%
-27.3%
T otal M ar ke t G r owth
2017 2018 2019 2020 YTD NOV 2021 5 Yr CAG R
Available Room Nights
Occ upied Room Nights
Ave r age Daily Rate
RevPAR
0.2% -3.3% 0.3% 5.5%
8.0% 1.6% -2.5% -26.1%
8.8% 3.7% 0.2% -18.6%
17.3% 8.9% -2.6% -43.0%
-0.3%
34.5%
-4.3%
29.1%
0.6%
-5.7%
-2.1%
-8.2%
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Competitive Market Historic Performance
Based on the information contained in the Trends database and CBRE Hotels research, the following chart
highlights the historic performance of the primary competitive set over the last several years.
HISTORIC MARKET PERFORMANCE SUMMARY - 401 CORRIDOR
Source: CBRE Hotels
• Supply increased by 2.5% over the five-year period, with the TownePlace Suites Oshawa opening in
late 2019, adjacent to the former Durham Hotel & Conference Centre which was converted to a
Marriott Courtyard. During the same period, the Knights Inn Scarborough closed in late 2018.
There have been no supply additions in the competitive market since the opening of the double pad
Marriott Courtyard and Towne Place Suites at 1011 Bloor Street East, Oshawa with 213 rooms in
late 2019.
• Asset type and quality ranges from full-service properties, such as Delta Hotel Toronto East, Toronto
Don Valley and Edward Hotel North York to limited-service branded properties, including Comfort
Inn. Travelodge, Knights Inn, Days Inn and Super 8. There are also several extended stay branded
hotels including Towne Place Suites Oshawa, Residence Inn and Quality Suites Whitby, and
Homewood Suites Ajax. The proposed Pickering hotel will be positioned as a focused service
property, with similar product to Courtyard Oshawa, Hilton Garden Inn Ajax and Best Western Plus
Executive Inn Toronto.
• Between 2016 and 2019, demand in the market grew by 7.0% with occupancy increasing from 64%
to 71%.
• From 2016 and 2019 market ADR increased from $106.15 in 2016 to $119.90 in 2019 with
compounded annual rate growth of approximately 4.1%.
• As a result of the solid occupancy levels and modest growth in ADR, RevPAR in the competitive market
grew from $68.40 in 2016 to $85.06 in 2019 with a compounded annual growth of 7.5%.
• In 2020, with the Covid-19 Pandemic, the market saw a 26.1% decline in occupied room night
demand. Accommodation markets across the country were impacted by the various government and
COMPETITIVE MARKET 36
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
public health restrictions and the near complete shutdown of travel due to the Covid pandemic. This
resulted in occupancy falling 21.3 points to 49.7%.
• During 2020, ADR in the competitive market eroded by 18.6% to $97.65, with a number of the
hotels contracted to provide social housing/shelters during the height of the pandemic.
• Year to date November 2021, occupied room night demand is up 34.5% with occupancy increasing
17.2 points to 66.6%. However, over the same period ADR is down by a further 4.3% as operators
continue to compete for demand in the market. The significant improvements in occupancy has been
somewhat offset by the loss in ADR, driving RevPAR growth of 29.1% through the end of November.
Market Segmentation
In most markets, overall demand varies based on the nature of travel. Accommodation demand for the
competitive market is typically generated by four different segments: Corporate, Meeting/Conference, Leisure
and Government/Other.
Corporate
Corporate travelers are defined as those travelling for business purposes, including those engaging with
locally based firms and/or passing through the area. Corporate demand is typically generated from Sunday
to Thursday nights. Corporate travelers are typically in the market for one to three nights and are single
occupancy. Often, their choice of accommodation is influenced by factors such as the quality and range of
facilities/amenities offered, location, and franchise/hotel chain loyalty, as they seek to accumulate rewards
program benefits. Historically, this demand segment has been somewhat less price sensitive than other
sources of room demand. However, corporate room demand often includes sources that have negotiated
room rates that may be discounted based on the volume of activity they produce. Overall, the corporate
demand segment is a key source of room night activity in the majority of markets.
Meeting/Conference
In this segment room demand is generated by sources travelling for the primary purpose of attending
meetings and conferences. This segment includes corporate groups, associations and SMERF (social, military,
educational, religious, and fraternal) groups. This segment is typically attracted by a hotel's in-house meeting
facilities and/or their proximity to other public assembly venues and conference/convention facilities.
Demand from corporate groups is typically generated between Sunday and Thursday nights.
Corporate groups tend to have a high level of single occupancy, while other groups tend to have more
double occupancy. Associations and SMERF groups have a more varied occupancy pattern and often hold
weekend meetings. This demand segment tends to be somewhat price sensitive. Meetings and conferences
typically generate between one and three nights of guest room demand. Larger groups can often negotiate
preferred/discounted room rates or discounts on their food and beverage charges and/or meeting room
rental rates.
COMPETITIVE MARKET 37
• • • •
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Leisure
Leisure travelers generally include vacationers or travelers passing through the area. This segment is typically
attracted by a hotel's location relative to area attractions and/or venues where they are participating in events
such as sports/recreational exhibitions and competitions. This segment can also include those visiting, but
not staying with friends and relatives. Leisure demand also includes occupied rooms generated online
through third party providers such as Expedia, Priceline, etc. and includes leisure groups such as sports teams
and tour groups.
Demand from leisure travelers is typically generated throughout the year on weekends, during
school/statutory holiday periods and in the summer months. Leisure travelers tend to have a high level of
double occupancy and tend to pay the highest rates. The typical stay for leisure travelers is between one and
four nights.
Government/Other
Government/Other demand includes demand generated by all levels of government. It can also include any
construction and maintenance crew business that may be staying in the area with durations ranging from
one night to several weeks/months. Indigenous travelers that qualify for federal government room rates are
included within this segment. Finally, this segment also includes occupied room night demand generated by
brand loyalty rewards redemptions or associate stays.
This segment is comprised of demand that is highly rate sensitive in comparison with the other market
segments. Some hotels choose to limit the volume of demand from this segment based on their low room
rate requirements/preference.
Competitive Market Segmentation
On the basis of CBRE Hotels market research, information contained in our Trends database and discussions
with local hoteliers, the estimated market segmentation for the competitive market in 2020 is presented
below:
2020 Market Segmentation
27%
4%
38%
31%
Corporate Mtg/Conf Leisure Gov/Other
COMPETITIVE MARKET 38
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Demand Segmentation
Segment
2019 2020 2019 2020
Room Night Demand % of Total
Corporate 286,005 173,304 33% 27%
Mtg/Conf 93,718 28,362 11% 4%
Leisure 301,400 245,779 34% 38%
Gov/Other 195,920 200,347 22% 31%
Source: Compiled by CBRE Hotels
• Corporate travel is estimated to generate approximately 173,304 occupied room nights or 27% of
the occupied room nights in the market, making it the second strongest demand segment in the
regional market. Corporate demand in 2020 fell by 39% compared to 2019 levels achieved in the
market with the onset of COVID-19.
• In the competitive market, there are approximately 5 properties which offer a significant amount of
meeting space and compete for both social catering events (i.e. weddings, galas, special events) as
well as group meeting conference events (i.e. Corporate or Association meetings). These properties
include: the Delta Hotel Toronto East, Toronto Don Valley Hotel, Radisson Hotel Toronto East,
Courtyard Oshawa and Best Western Plus Durham Hotel and Conference Centre. This segment was
estimated to generate about 4% of the total demand in the market or 28,362 occupied room nights
in 2020, a 70% decline from levels achieved in 2019, prior to the gathering restrictions imposed by
COVID-19.
• Leisure travelers are travelers are primarily tourists visiting attractions in and around the GTA,
attending or participating in sporting events in the GTA East market or visiting friends and family.
This is the strongest demand segment in the market, estimated to account for 245,779 occupied
room nights or 38% of all hotel stays in 2020. Compared to 2019 levels, leisure demand was down
by approximately 18% in 2020.
• The Other segment accounts for almost 31% of demand in the market or 200,347 occupied room
nights. A significant portion of this demand is generated by third-party booking channel demand
which the properties use, particularly in off-peak periods, to provide base demand. In addition, since
the majority of the properties are branded there is demand generated by brand reward or associate
stays. Lastly, the market sees demand in this segment generated by Government business and in
2020 there was an increased need for hotels to provide shelter/social housing to accommodate
persons needing to isolate.
Competitive Market Supply Analysis
CBRE Hotels considers the following factors in determining which additions to supply may affect the
competitive market:
• Distance from the subject hotel
• The current and future condition of the physical plant
COMPETITIVE MARKET 39
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
• The type of facilities and amenities to be offered
• Information from hotel operators on “who” would be considered a primary competitor
It should be noted that information regarding proposed hotel developments may vary once the planning
department grants approvals or hotel development financing is finalized. While CBRE Hotels has made
attempts to determine the level of new supply entering the market, it is impossible to determine every hotel
that will be developed in the future, when they will be completed or their potential impact on the subject
hotel. The inherent risk of any future new hotel supply has been implicitly considered in the selection of a
stabilized occupancy level for the subject property.
Based on information available, discussions with hotel operators and our general knowledge of the industry,
the following outlines the supply that is projected to impact the competitive market over the projection period.
Summary of Proposed Supply Changes
No. Name Rooms Probability Type Opening Date Status
CBREIHotels
1 Proposed Pickering Hotel 120 100% Focused Service 1-Jan-25 Proposed
2 Pickering Casino Resort 275 100% Extended Stay 1-Sep-22 Under Construction
Total 395
Source: CBRE Hotels
• The 275-room Pickering Casino Resort Hotel is under construction next to the Pickering Casino
Resort. The hotel is expected to open by Fall 2022 resulting in 92 rooms effectively entering the
competitive market in 2022 and the balance of the rooms in 2023.
• For the purposes of this analysis, we have assumed that a 120-room focused service branded hotel
will enter the Pickering market by 2025.
Over the projection period, supply in the competitive market is projected to grow by 11.1%% or 395 rooms.
Market Demand and ADR Projections
The demand projections prepared for the competitive market are based on the economic outlook for the
area, current market dynamics and anticipated changes in demand patterns throughout the projection
period.
At this time, there remains considerable uncertainty around the impacts on the economy and more specifically
the accommodation sector resulting from the COVID-19 (corona) virus. While impacts vary across markets,
national RevPAR contracted by approximately 60% in 2020. Current expectations are for demand recovery to
begin in earnest in spring of 2022 with ADR and RevPAR recovery lagging behind returning to 2019 levels by
2025. These forecasts are predicated on the assumption that there will not be a re-implementation of travel
restrictions or border closures and that any additional waves can be managed without lockdowns or significant
restrictions. Lastly, a continual gradual demand growth will be supported by continued vaccination progress
globally. There are expected to be recovery lags in segments such as medium to large meeting conference,
international corporate and leisure.
COMPETITIVE MARKET 40
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
The recovery will be as much about vaccinations and the easing of travel restrictions and gathering limits, as
the willingness or ability of businesses to allow employee travel. The willingness and comfort of individuals to
travel for both leisure and business purposes will also impact the speed of recovery.
The demand projections below take into account these impacts and also considers the historic and anticipated
future factors impacting demand in the competitive market. The following summarizes our projections for
future room demand and ADR growth.
Projected Market Performance Summary
Actual Projection Projection Projection Projection Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Market Projections 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Total Demand
Occupied room nights 647,793 869,480 930,007 981,071 1,014,127 1,040,012 1,040,012 1,040,012 1,040,012 1,040,012 1,040,012
Demand growth 34.2% 7.0% 5.5% 3.4% 2.6% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Supply
Available Room Nights 1,304,363 1,300,860 1,334,318 1,401,235 1,405,074 1,445,035 1,445,035 1,445,035 1,448,994 1,445,035 1,445,035
Supply Growth -0.3% 2.6% 5.0% 0.3% 2.8% 0.0% 0.0% 0.3% -0.3% 0.0%
Market Occupancy 49.7% 66.8% 69.7% 70.0% 72.2% 72.0% 72.0% 72.0% 71.8% 72.0% 72.0%
Market Average Daily Rate $97.65 $93.25 $102.58 $110.78 $118.54 $120.91 $123.33 $125.79 $128.31 $130.88 $133.49
Market RevPar $48.49 $62.33 $71.50 $77.56 $85.56 $87.02 $88.76 $90.54 $92.09 $94.19 $96.08
Rate Growth -4.5% 10.0% 8.0% 7.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Source: CBRE Hotels
• Based on year-to-date performance, and the uneven lifting of COVID-19 related travel and
gathering restrictions as new variants are discovered, the competitive market is projected to see
overall demand increase by 34.2% in 2021, with occupancy levels climbing to 66.8%.
• By 2022, assuming all travel restrictions are lifted, demand is projected to grow by 7.0% with
occupancy levels improving to 69.7%. Market demand is projected to grow a further 5.5% in 2023,
as the industry continues to recover to pre-pandemic demand levels. By 2024, market occupancy is
expected to reach 72.2%.
• Between 2022 and 2025 new supply will enter the market including the 275-room Pickering Casino
Resort Hotel and the proposed 120-room Pickering focused-service hotel.
• With induced demand generated by the new Casino hotel, coupled with recovery growth in the
market, occupancy is projected to recover to 72% by 2025.
• In terms of Average Daily Rate (ADR), the market is projected to see a further 4.5% erosion in rate in
2021, with substantial growth of 10.0% in 2022, 8.0% in 2023, and 7.0% in 2024, as the market
recovers, and stabilizes at 2.0% per annum in 2025 and for the remainder of the projection period.
COMPETITIVE MARKET 41
PROPERTY PERFORMANCE
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
SUBJECT PROPERTY PROJECTED PERFORMANCE
Projected Occupancy and Average Daily Rate
In assessing the projected occupancy and rate performance of the proposed property, a market penetration
analysis was undertaken, in which the concept of “fair market share” was utilized. This concept states that,
all things being equal, a property will attract rooms demand in the same proportion as its share of rooms
supply. Market penetration in excess of 100.0% indicates that a property possesses competitive advantages
relative to the market as a whole, while competitive weaknesses are reflected in penetrations of less than
100.0%. The marketing philosophy and pricing strategy for a property can also impact its penetration.
Accordingly, there are other factors besides competitive weakness that can contribute to a penetration of less
than fair share.
The following analysis assesses the projected market position/occupancy, average rate, and RevPAR levels
for the proposed hotel. The projections are based on numerous factors including the economic influences,
the projected supply/demand relationship in the competitive market, interviews with local stakeholders and
expected growth in demand for accommodations in the local area. It is assumed that there are no significant
changes in the market over the projection period that would impact the current status of the competitive
rooms supply other than as currently identified.
The following section presents our projections of demand for the proposed Pickering focused-service property
by market segment.
Corporate
Corporate travel in the region occurs year-round. Corporate demand is typically concentrated between
Tuesday and Thursday. The subject hotel is expected to be able to capture more than its fair share of demand
in this segment due to its assumed affiliation with a strong/internationally recognized brand, its quality and
new construction, its strong product offering as an upscale focused service hotel, and its close proximity to
major employers and demand generators within the City of Pickering. The opening of the subject hotel will
not only satisfy currently unaccommodated corporate demand in the local area specifically but is also
expected to re-capture a portion of demand that was previously leaving the area to find better
accommodation product elsewhere.
The hotel is projected to capture 100.0% of market share in Year 1. The hotel is projected improve its
penetration to 105.0% in Year 3 and stabilize at this level. Once stabilized the hotel is projected to capture
approximately 10,300 occupied room nights annually, with the Corporate segment representing
approximately 32% of the hotel’s total demand.
Meeting and Conference
The hotel will provide approximately 4,500 square feet of dedicated on-site meeting space across three
rooms. Given its location in the heart of downtown Pickering, adjacent to City Hall and the Pickering Town
PROPERTY PERFORMANCE 43
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Centre, with direct access to the Pickering GO Station and Highway 401, the subject hotel is projected to
capture more than its fair share of demand from the Meeting/Conference segment.
The proposed hotel is expected to achieve a market share of 100.0% in this segment in Year 1, increasing
to 105.0% by Year 3, capturing approximately 3,100 occupied room nights annually once operations are
stabilized. Demand from this segment is projected to represent 9.5% of the hotel’s total demand.
Leisure
Leisure demand is typically concentrated throughout the warmer months when travelers are more likely to
book vacations, add vacation time onto a business trip or conference, or visit friends and relatives. In this
market, there are also sports tournaments which will generate some demand in the winter and shoulder
periods. Leisure demand generally occurs on weekends; however, in the summer months weekday leisure
demand increases substantively. The GTA East market also benefits from overflow demand from the
downtown Toronto market during peak leisure travel periods and the proposed focused-service hotel will be
well positioned to capture this demand, particularly with its accessibility to Highway 401. The subject hotel
will be a strong competitor in this segment offering a focused-service product with an indoor pool, an
international brand, and complimentary breakfast.
The proposed hotel is expected to capture approximately 38% of its demand from the leisure segment and
is projected to achieve a penetration of 110% of fair market share once stabilized. The hotel is expected to
capture approximately 12,300 occupied room nights annually from this segment at stabilization.
Government/Other
Government/Other demand provides a relatively consistent source of demand throughout the year. Demand
in this segment will likely be generated by third-party booking channel demand, some construction crew
demand along with demand from brand related associate or rewards stays. The market has some level of
local and regional Government demand that will also be captured.
The proposed hotel is projected to capture 85.0% of fair share from this segment in Year 1 improving to
90.0% by Year 3. This segment will represent approximately 21% of the hotels total demand once stabilized
capturing approximately 6,850 occupied room nights annually.
Average Daily Rate
The average daily rate and the overall occupancy of a lodging facility are the foundation for the property’s
financial performance. While a property’s other revenue components (food and beverage, telephone, spa,
other income, etc.) are crucial to the operation of the hotel, they are dependent on the overall number of
occupied rooms. Furthermore, the occupancy and average daily rate of a hotel are highly correlated. In
reality, one cannot make a projection of one without a projection of the other.
As a newly constructed focused-service branded hotel, the proposed subject hotel is projected to achieve a
rate penetration of 136.4% in its opening year, increasing to 141.8% by Year 4 and to maintain this level of
performance throughout the projection period. The subject is projected to achieve an ADR of $165 in Year
1, increasing to $185 by Year 5.
PROPERTY PERFORMANCE 44
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
From a RevPAR perspective the proposed hotel is projected to achieve 133.9% of fair share in Year One
improving to 146.3% by Year Four as the hotel ramps up. As one of the newest hotels in the market, and as
the only upscale focused service branded hotel in Pickering, the proposed hotel is expected to be one of the
top performing assets in the GTA East market.
The following section presents our projections of demand for the subject property by market segment.
Projected Performance Summary
Over the projection period, occupancy for the potential hotel development is expected to improve from 70.6%
in Year 1 to 74.2% in Year 3. Occupancy is projected to hold at this level over the balance of the projection
horizon, with an ADR of $164.96 in Year 1 increasing to $181.94 by Year 4.
Based on our review, projected results for the property by market segment are summarized in the following
table.
PROPERTY PERFORMANCE 45
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Proposed Pickering Hotel Segmentation Projections
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Supply 2025 2026 2027 2028 2029 2030
Proposed Pickering Hotel 120 120 120 120 120 120
Total Market Supply 3,959 3,959 3,959 3,959 3,959 3,959
Fair Share of Supply 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Demand Projections 2025 2026 2027 2028 2029 2030
Corporate
Fair Share of Demand 9,787 9,787 9,787 9,787 9,787 9,787
Penetration Rate 100.0% 102.5% 105.0% 105.0% 105.0% 105.0%
Total Demand Captured 9,787 10,032 10,277 10,277 10,277 10,277
Ratio to Total Demand 31.6% 31.6% 31.6% 31.6% 31.6% 31.6%
Corporate ADR $158.00 $164.32 $169.25 $174.33 $177.81 $181.37
ADR Growth 0.0% 4.0% 3.0% 3.0% 2.0% 2.0%
Corporate Room Revenue $1,546,421 $1,648,485 $1,739,352 $1,791,533 $1,827,363 $1,863,911
Mtg/Conf
Fair Share of Demand 2,957 2,957 2,957 2,957 2,957 2,957
Penetration Rate 100.0% 102.5% 105.0% 105.0% 105.0% 105.0%
Total Demand Captured 2,957 3,030 3,104 3,104 3,104 3,104
Ratio to Total Demand 9.6% 9.6% 9.5% 9.5% 9.5% 9.5%
Mtg/Conf ADR $163.00 $169.52 $174.61 $179.84 $183.44 $187.11
ADR Growth 0.0% 4.0% 3.0% 3.0% 2.0% 2.0%
Mtg/Conf Room Revenue $481,913 $513,719 $542,036 $558,297 $569,463 $580,852
Leisure
Fair Share of Demand 11,178 11,178 11,178 11,178 11,178 11,178
Penetration Rate 105.0% 107.5% 110.0% 110.0% 110.0% 110.0%
Total Demand Captured 11,737 12,016 12,295 12,295 12,295 12,295
Ratio to Total Demand 37.9% 37.9% 37.8% 37.8% 37.8% 37.8%
Leisure ADR $185.00 $192.40 $198.17 $204.12 $208.20 $212.36
ADR Growth 0.0% 4.0% 3.0% 3.0% 2.0% 2.0%
Leisure Room Revenue $2,171,253 $2,311,868 $2,436,601 $2,509,699 $2,559,893 $2,611,091
Gov/Other
Fair Share of Demand 7,602 7,602 7,602 7,602 7,602 7,602
Penetration Rate 85.0% 87.5% 90.0% 90.0% 90.0% 90.0%
Total Demand Captured 6,462 6,652 6,842 6,842 6,842 6,842
Ratio to Total Demand 20.9% 21.0% 21.0% 21.0% 21.0% 21.0%
Gov/Other ADR $140.00 $145.60 $149.97 $154.47 $157.56 $160.71
ADR Growth 0.0% 4.0% 3.0% 3.0% 2.0% 2.0%
Gov/Other Room Revenue $904,621 $968,477 $1,026,032 $1,056,813 $1,077,949 $1,099,508
TOTAL Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Fair Share Demand 31,523 31,523 31,523 31,523 31,523 31,523
Total Demand Captured 30,942 31,730 32,518 32,518 32,518 32,518
Total Rooms Revenue $5,104,208 $5,442,548 $5,744,022 $5,916,342 $6,034,669 $6,155,362
Property Occupancy 70.6% 72.4% 74.2% 74.0% 74.2% 74.2%
Property ADR $164.96 $171.53 $176.64 $181.94 $185.58 $189.29
Property RevPAR $116.53 $124.26 $131.14 $134.71 $137.78 $140.53
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
2025 2026 2027 2028 2029 2030
Market Occupancy 72.0% 72.0% 72.0% 71.8% 72.0% 72.0%
Subject Market Penetration 98.2% 100.7% 103.2% 103.2% 103.2% 103.2%
Projected Subject Occupancy 70.6% 72.4% 74.2% 74.0% 74.2% 74.2%
Market ADR $120.91 $123.33 $125.79 $128.31 $130.88 $133.49
Subject ADR Penetration 136.4% 139.1% 140.4% 141.8% 141.8% 141.8%
Projected Subject ADR $164.96 $171.53 $176.64 $181.94 $185.58 $189.29
Market RevPAR $87.02 $88.76 $90.54 $92.09 $94.19 $96.08
Subject RevPAR Index 133.9% 140.0% 144.9% 146.3% 146.3% 146.3%
Subject RevPAR $116.53 $124.26 $131.14 $134.71 $137.78 $140.53
Source: CBRE Hotels
PROPERTY PERFORMANCE 46
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
SUBJECT PROJECTED OPERATING PERFORMANCE
Introduction
Given that the Proposed Pickering Hotel will be newly constructed asset, in preparing the operating
projections relied upon in the Income Approach a build-up method or zero-based approach has been used
to project revenues and expenses on a department-by-department basis. The departmental revenue and
expenses build up detail is included in Appendix B.
In order to estimate the revenues and expenses for the hotel, the pro forma assumptions have been based
on a review of the operating performance of similar and like hotels as tracked through the in-house CBRE
Canadian Trends database. The CBRE Hotel database of financial statements annually includes over 600
properties across Canada. This database, which provides insight into the operating performance of other
directly competitive and comparable hotels, includes a sample of upper midscale hotels under globally
recognized brands such as Hilton, Marriott/Starwood, IHG, and Hyatt. The comparative hotels were selected
based on their size, facility program and market mix.
The Uniform System of Accounts for the Lodging Industry recommended by the American Hotel and Lodging
Association and in general use throughout the hotel industry in Canada and has been used to classify income
and expenses in this report. In conformity with this system, only direct operating expenses are charged to
operating departments of the hotel. The general overhead items, which are applicable to operations, are
classified as undistributed and include administrative and general expenses, marketing, property operations
and maintenance, and energy costs.
Based on our review of the market, and upon the discussion of projected occupancies and average daily
rates, a projection of operating results has been prepared for the subject hotel as a 120-room focused service
hotel. The projections assume that the hotel will be open and operating as an upscale branded focused-
service hotel as of January 1, 2025.
Revenue
Rooms
• The rooms revenue projected for the subject hotel are based on the projected occupancy and ADR
as discussed in the previous section.
Food & Beverage
• F&B revenue at the subject will be generated by a 75-seat all day restaurant as well as meeting room
revenues and associated banqueting and catering services.
• In Year 1, the subject is expected to generate F&B revenue on a POR basis of about $27.00, or about
$835,000. As occupancy levels ramp up over the initial years of operation, F&B revenues will grow
on a fixed-variable basis with occupancy.
• Once stabilized F&B revenue is projected to account for approximately 13% of total revenue.
PROPERTY PERFORMANCE 47
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Other Operating Departments
• For the subject hotel the majority of revenues are projected to be earned from various guest services
such as 24-hour sundry market sales, guest laundry and telecommunications charges as the hotel is
not expected to charge for parking in line with market conditions.
• In Year 1, revenues have been projected at $5.00 POR. As occupancy ramps up over the initial years
the Other Operated Department revenues are expected to grow on a fixed-variable basis.
Miscellaneous Income
• Miscellaneous Income is generated by auxiliary fees and services such as vending machine
commissions, attrition fees, cleaning surcharges and other miscellaneous sources.
Departmental Expenses
Rooms
• In Year 1 rooms expenses has been projected at $49.46 POR or 30.0% of revenues.
• These expenses have been projected based local market wages rates (inflated to 2025$).
• As the hotel ramps up performance between Year 2 and Year 4 it is expected that costs as a
percentage of revenue will decline and will be approximately 28.3% of revenue by Year 4.
Food & Beverage
• The Food & Beverage expenses at the property are generally quite variable in nature as about half
of the revenues will be generated by banqueting. In addition, the layout of the F&B dining space will
allow for a streamlined operating model.
• As a percentage of revenues, the expenses have been projected at 88.4% of revenues throughout
the projection period.
Other Operated Departments
• Expenses in this department are primarily generated by the cost of goods associated with the sundry
market.
• Other Operated Department expenses are projected to be $2.00 POR in Year 1, growing on a fixed-
variable basis with expenses representing 40% of revenue.
Undistributed Expenses
As with the revenue and expense projections on a departmental basis CBRE has relied on a zero-based build
up approach to project the Undistributed and Fixed expenses for the subject property. These expenses are
based on local market wage rates and are in line with comparable properties in the CBRE Trends database.
Administration & General
• The A&G expenses for the subject hotel have been projected to be $4,794 PAR or 9.3% of revenue.
PROPERTY PERFORMANCE 48
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
• As performance of the asset ramps up these expenses will grow on a fixed-variable basis declining
to 8.7% of revenue by Year 4.
Information & Telecommunications Systems
• These expenses include the costs of internet, telecommunication, Property Management Systems
(PMS) and Point of Sales (POS) systems as well as other related system and network expenses.
• In Year 1 these expenses have been projected to be $771 PAR or 1.3% of revenue.
• Going forward these expenses will grow on a fixed-variable basis and will decline as a percentage
of revenue to 1.1% by Year 3 when the hotel reaches stabilized occupancy.
Marketing & Sales
• In Year 1 Marketing & Sales expenses have been projected at $1,783 PAR or 1.5% of revenue.
• Expenses will grow on a fixed-variable basis as the occupancy ramps up and will stabilize at 1.4% of
revenue in Year 3.
Franchise Fees
• Franchise Fees includes Royalty and Program costs paid to the brand. For the purposes of this
analysis, we have projected average franchise fees for focused-service brands to be in the range of
5.5%, with an additional Central Program Marketing Fee in the range of 3.0% of Rooms Revenue.
Property Operations & Maintenance
• POMEC expenses in Year 1 have been projected to be $2,281 PAR. As a new build, it is expected
that repairs and other similar work will be lower than the comparable properties in the early years.
• As demand and occupancy levels increase POMEC expenses are projected to increase to $2,385
PAR or 4.2% of revenue by Year 3.
Utilities
• In Year 1, Utilities expenses have been projected to be $2,000 PAR and will increase as
demand/occupancy levels increase in the following years.
• By Year 4 the expenses will stabilized at 3.6% of revenue.
Management Fee
• A Management Fee of 3.0% of Gross Revenues has been applied over the projection period.
• This Management Fees has been included to render the hotel a net carefree investment and is in line
with industry averages for this type of property.
PROPERTY PERFORMANCE 49
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Fixed Expenses
Property Taxes
• Since the subject will be newly constructed, the property’s taxes will be based on an assessment of
the asset upon completion. As such, to estimate the hotel’s taxes, the historic annual property taxes
for the subject’s primary regional competitors were reviewed.
• In Year 1 Property Tax expenses have been projected to be at $1,600 PAR.
• Going forward Property Taxes have been projected to grow by inflation.
Insurance
• In Year 1, the insurance expenses for the subject hotel have been based on industry norms and are
expected to be about $400 PAR growing by inflation over the projection period.
Reserve for Replacement
• A Reserve for Asset Replacement has been included to account for the replacement of furnishings
fixtures and equipment.
• CBRE has included a Reserve for Asset Replacement of 4.0% of Total Revenue which is in line with
industry averages and reflects typical underwriting criteria.
Projected Operating Performance Summary
The projected operating performance for the proposed hotel is summarized on the following pages.
PROPERTY PERFORMANCE 50
-----+-+-I'---+-+-----'-l-l--+--l-----+-+----'--1--1------+--l-LL
......
-------------1 ·--1-------t-·!--------t--+-------------1---·······--················· ···--!-----+--
CBREIHotels
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51
IMPLICATIONS
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
IMPLICATIONS
Investment Analysis
The purpose and intended use of this report is to determine the level of market and economic support for
potential hotel development in Pickering, Ontario.
This report is for public consumption and may be distributed by the City of Pickering to interested parties.
The intended use of the report is to assist the Client, in attracting potential hotel/accommodation investment.
As the conclusions offered in this report are preliminary in nature and are subject to change should a specific
site and hotel development program be identified; the report cannot be relied upon, by any person or entity
other than the Client, without the express prior written consent of CBRE, and the individual(s) who authored
the Advisory Report. The conclusions offered in this report may be subject to change should the branding or
facility program be altered. Further, the discussion of project viability, including the level of investment which
could be supported, should not be construed as an opinion of market value. This could only be determined
with the completion of a full AACI/CUSPAP compliant appraisal.
We have utilized the Discounted Cash Flow (DCF) methodology in order to quantify the level of investment
that could be reasonably supported based on the operating projections for the potential hotel as presented
in this report. The basic premise of the Discounted Cash Flow Method is that the market value is equal to
the present value of future cash flows forecasted over an investment horizon, together with the proceeds of
a deemed disposition at the end of the holding period.
In this analysis, a terminal capitalization rate of 7.00% has been applied against the projected sixth year net
operating income is capitalized to determine the estimated future value (reversionary value). A discount rate
of 8.50% has been utilized to present value the projected net income.
The subject property’s value using the Discounted Cash Flow Method is summarized below:
IMPLICATIONS 53
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
DISCOUNTED CASH FLOW ANALYSIS
Proposed Pickering Hotel
Rooms: 120
DCF Scenario: 5 yr
Discounted Annually
Year Cash Flow 7.50% 8.00% 8.50% 9.00% 9.50%
1 $1,256,994 $1,169,297 $1,163,884 $1,158,520 $1,153,206 $1,147,940
2 $1,453,738 $1,257,967 $1,246,346 $1,234,885 $1,223,582 $1,212,433
3 $1,617,321 $1,301,880 $1,283,882 $1,266,214 $1,248,869 $1,231,839
4 $1,698,205 $1,271,616 $1,248,231 $1,225,381 $1,203,051 $1,181,227
5 $1,732,169 $1,206,557 $1,178,885 $1,151,971 $1,125,791 $1,100,321
6 yr $1,766,812
Reversion rate:
7.00% $25,240,172 $17,581,260 $17,178,037 $16,785,861 $16,404,380 $16,033,255
Plus Cashflow $6,207,317 $6,121,227 $6,036,971 $5,954,498 $5,873,761
Total Present Value $23,788,577 $23,299,264 $22,822,832 $22,358,878 $21,907,017
Present Value Per Room $198,238 $194,161 $190,190 $186,324 $182,558
RESALE - CAP RATE MATRIX
Proposed Pickering Hotel
CBREIHotels
Net Proceeds PV @ PV @ PV @ PV @ PV @
For the Cap Rates From Sale 7.50% 8.00% 8.50% 9.00% 9.50%
6.75% $26,174,993 $24,439,734 $23,935,488 $23,444,530 $22,966,448 $22,500,841
7.00% $25,240,172 $23,788,577 $23,299,264 $22,822,832 $22,358,878 $21,907,017
7.25% $24,369,821 $23,182,326 $22,706,918 $22,244,009 $21,793,210 $21,354,146
Source: CBRE Hotels
Accordingly, the detailed DCF calculations indicate that the proposed focus-service branded hotel could
support a total investment in the range of $22,800,000 (rounded) or $190,000 (rounded) per room under
traditional debt/equity financing and normalized return on investment expectations.
At an estimated GFA of 69,115 SF or 576 SF per room, the proposed hotel could support an overall
investment of approximately $330 per SF, which is slightly below expected capital costs for a project of this
nature. As a point of reference, residential condominium developments are typically in the range of $400
to $500 per SF in the GTA. Since residential condominium construction requires higher-end finishes (i.e.,
full kitchens, etc.) than a hotel product, we would expect that construction costs for the subject development
to be somewhat lower – potentially in the range of $350 to $400 per SF, equating to $200,000 to $230,000
per room.
In order to bridge the investment gap, are number of options could be considered, such as:
• The City of Pickering providing the land for hotel development at no cost to the developer;
• Constructing the hotel as part of the proposed residential development, with one podium, shared
elevators and parking facilities; and/or
• Providing hotel underground parking at no cost to the developer.
The “Supportable Value off Cashflow” of $23 million may be slightly below the level of investment required
to construct the hotel. However, with potential incentives to attract a hotel developer, the proposed hotel
development would likely meet both the profitability and return expectations based on traditional investment
parameters that typical investor and lenders would be seeking.
IMPLICATIONS 54
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
This discussion of project viability, including the level of investment which could be supported, should not be
construed as an opinion of market value. This could only be determined with the completion of a full
AACI/CUSPAP compliant appraisal.
IMPLICATIONS 55
APPENDIX A
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
ASSUMPTIONS AND LIMITING CONDITIONS
1. CBRE Limited. through its appraiser (collectively, “CBRE”) has inspected through reasonable observation the subject
property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and
the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made
as to such matters.
2. The report, including its conclusions and any portion of such report (the “Report”), is as of the date set forth in the
letter of transmittal and based upon the information, market, economic, and property conditions and projected levels
of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon
the purchasing power of the Canadian Dollar on such date. The Report is subject to change as a result of fluctuations
in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events
or conditions which occur subsequent to such date.
3. Unless otherwise expressly noted in the Report, CBRE has assumed that:
(i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or
exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including
without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title
or use of the subject property) and makes no representations regarding title or its limitations on the use of the
subject property. Insurance against financial loss that may arise out of defects in title should be sought from a
qualified title insurance company.
(ii) Existing improvements on the subject property conform to applicable local, provincial, and national federal
building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in
a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC,
elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and
the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained
independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore,
makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are
not qualified to judge matters of an engineering nature, and furthermore structural problems or building system
problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a
sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of
building systems.
(iii) Any proposed improvements, on or off-site, as well as any alterations or repairs considered will be completed in
a workmanlike manner according to standard practices.
(iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances.
The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater,
mold, or other potentially hazardous materials may affect the value of the property.
(v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or
solid, and no air or development rights of value may be transferred. CBRE has not considered any rights
associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report.
(vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the
present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value
of the subject property.
(vii) All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any
local, provincial, nor national government or private entity or organization have been or can be readily obtained
or renewed for any use on which the Report is based.
(viii) The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super-
efficiently.
(ix) The subject property and its use, management, and operation are in full compliance with all applicable federal,
provincial, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic
hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses,
building codes, permits, and licenses.
A1
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
(x) The subject property is in full compliance with the Disabilities Act of the province. CBRE is not qualified to assess
the subject property’s compliance with the Province’s Disabilities Act, notwithstanding any discussion of possible
readily achievable barrier removal construction items in the Report.
(xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and
no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor
reviewed or confirmed the accuracy of any legal description of the subject property.
Unless otherwise expressly noted in the Report, no issues regarding the foregoing were brought to CBRE’s attention,
and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with
any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the
Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend
the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions
regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is
urged to retain an expert in the applicable field(s) for information regarding such conditions.
4. CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner,
or owner’s representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and
information include, without limitation, numerical street addresses, lot and block numbers, Assessor’s Parcel
Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas,
net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses,
budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordingly,
if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may
include the conclusions of the Report. The client and intended user should carefully review all assumptions, data,
relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors
within 30 days after the date of delivery of the Report.
5. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or
information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit.
6. All furnishings, equipment and business operations have been disregarded with only real property being considered
in the Report, except as otherwise expressly stated and typically considered part of real property.
7. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the
information and assumptions contained within the Report. Any projections of income, expenses and economic
conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations
of future income and expenses as of the date of the Report and not predictions of the future. Actual results are
affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic,
market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not
warrant any such projections.
8. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or
guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to
the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort,
terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole
purpose of providing the intended user with CBRE’s independent professional opinion of the value of the subject
property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any
investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor,
or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume
any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of
CBRE to buy, sell, hold, or finance the subject property.
9. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge
beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in
areas that fall outside the scope of the real estate appraisal profession for such matters.
10. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood
hazard insurance.
11. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any
special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend
and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any
situation arising out of the user’s failure to become familiar with and understand the same.
A2
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
12. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests
will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests.
13. The allocations of the total value estimate in the Report between land and improvements apply only to the existing
use of the subject property. The allocations of values for each of the land and improvements are not intended to be
used with any other property or appraisal and are not valid for any such use.
14. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes
only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed,
reproduced, or used apart from the Report.
15. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent
of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the
internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user.
Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental
authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents
shall not be published, in whole or in part, in any public document without the written consent of CBRE, which
consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or
otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user
who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely
on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE
shall have no liability or responsibility to any such unintended user.
Important Warning -Material Valuation Uncertainty from Novel Coronavirus
The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a
“Global Pandemic” on the 11th March 2020, has been causing heightened uncertainty in both local and
global market conditions. Initially the global financial markets saw steep declines largely on the back of the
pandemic over concerns of trade disruptions and falling demand. What was and continues to be a more
significant impact for the hospitality and tourism sector is that many countries globally have implemented
strict travel restrictions, a range of quarantine or proof of vaccination and “social distancing” measures.
Market activity is being impacted in most sectors. As at the valuation date, we consider that we can attach
less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the
current response to COVID-19 means that we are faced with an unprecedented set of circumstances on
which to base a judgement.
Our valuation(s) is / are therefore reported on the basis of ‘material valuation uncertainty’. Consequently,
less certainty – and a higher degree of caution – should be attached to our valuation than would normally
be the case. Values may change more rapidly and significantly than during standard market conditions.
Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that
you keep the valuation of the subject under frequent review.
The uncertainty around COVID-19 is having a direct impact on the real estate market. The full scale of the
impact is currently unknown and will largely depend on both the scale and longevity of the pandemic. Our
valuation is based on the information available to us at the date of valuation. Whilst we have taken all
reasonable steps to estimate the effect on the property, due to the significant uncertainty in the property,
capital markets and the rapid unfolding of these events, it is difficult to quantify and assess the impact that
the pandemic has had on capital values for this type of property. Caution is advised when relying on this
valuation.
A3
APPENDIX B
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
DEPARTMENTAL REVENUES AND EXPENSES DETAIL
Room Departmental Expenses 2025
2025 Year 1
Rooms
Occupancy (%)
Average Daily Rate ($)
Total Occupied Room Nights
Total Room Revenues ($)
Management/Supervisory Staff
Manager
Front Desk Management
Housekeeping Supervision
Total MGT/Supervisory
Housekeeping
Rooms per Shift
Hourly Rate
Cost of Housekeepers- Year One
Laundry
Shifts per Day
Hourly Rate
Cost of Laundry- Year One
Bellman/Concierge
Shifts per Day
Hourly Rate
Cost of Bellman/Concierge- Year One
Front Desk
Shifts per Day
Hourly Rate
Cost of Front Desk Staff
Night Audit
Shifts per Day
Hourly Rate
Cost of Front Desk Staff
Other Staffing Cost
Shifts per Day
Hourly Rate
Other Staffing Cost
Total Rooms Department Labour Costs
Rooms Dept Labour Cost
Add Payroll Costs & Benefits
Total Rooms Department Payroll & Benefits
Other Rooms Department Expenses
T.A. Commissions (% of Room Rev)
Reservation Fees (% of Room Rev)
Laundry/Linen/Guest Supplies ($ORN)
Complimentary Food ($ORN)
Other Rooms Dept Cost
Total Rooms Other Expenses
120
71%
$164.96
30,942
$5,104,208
# of Staff Salary
1.0 $70,000
1.0 $50,000
1.0 $40,000
3.0 $160,000
16.0
$21.00
$324,892
2.0
$18.00
$105,120
0.0
$0.00
$0
2.0
$22.00
$128,480
1.0
$25.00
$73,000
1.0
$16.00
$46,720
$838,212
25.0% $209,553
$1,047,765
3.0% $153,126
1.0% $51,042
$0.00 $0
$0.00 $0
$9.00 $278,479
$482,647
Total Rooms Department Expenses $1,530,412
Total Expenses % of Revenue $ORN
Labour
Other
Total
20.5% $33.86
9.5% $15.60
30.0% $49.46
Source: CBRE Hotels
B1
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Food and Beverage Departmental Projections
Year 1 SEATS SQ.FT. $/SEAT $/SQ.FT. $ORN REVENUES
HOTEL RESTAURANTS/LOUNGES
All Day Restaurant 75 1,875 $6,188 $248 $15.00 $464,131
TOTAL HOTEL RESTAURANTS/LOUNGES 75 1,875 $6,188 $248 $15.00 $464,131
BANQUETING
F&B REVENUE 300 4,500 $825 $55 $8.00 $247,537
MEETING ROOM RENTALS $309 $21 $3.00 $92,826
AV RENTAL/SERVICE CHARGES $103 $7 $1.00 $30,942
TOTAL BANQUETING REVENUE $1,238 $83 $12 $371,305
ROOM SERVICE/OTHER $0.00 $0
TOTAL FOOD & BEVERAGE REVENUE 375 6,375 $2,228 $131 $27.00 $835,436
COSTS OF GOODS SOLD % $ORN EXPENSES
HOTEL RESTAURANTS/LOUNGES 28.0% 4.2 $129,957
BANQUETING 24.0% $2.88 $89,113
ROOM SERVICE/OTHER 0.0% $0.00 $0
TOTAL COSTS OF GOODS SOLD 26.2% $7.08 $219,070
PAYROLL & BENEFITS % $ORN EXPENSES
MANAGEMENT 18.0% # Mgmt Staff 2 $4.85 $150,000
HOTEL RESTAURANTS/LOUNGES 18.0% $2.70 $83,544
BANQUETING 13.0% $1.56 $48,270
ROOM SERVICE/OTHER 0.0% $0.00 $0
KITCHEN 12.0% $3.24 $100,252
BENEFITS 25.0% $3.09 $95,516
TOTAL PAYROLL & BENEFITS 57.2% $15.43 $477,582
GENERAL OPERATING EXPENSES 5.0% $1.35 $41,772
TOTAL OPERATING EXPENSES 88.4% $23.86 $738,424
NET DEPARTMENTAL PROFIT 11.6% $3.14 $97,012
Source: CBRE Hotels
Proposed Pickering Hotel
OTHER OPERATED DEPARTMENTS / RENTALS AND OTHER INCOME
Year 1
OTHER OPERATED DEPARTMENTS
$ORN
Revenue Expense
TOTAL
Revenue Expense Departmental Ratio
Other $5.00 $2.00 $154,710 $61,884 40.0%
Total Other Operated Departments $5 $2 $154,710 $61,884 40.0%
Miscellaneous Income (Net)
$ORN
Income
TOTAL
Income
Other Income $2.50 $77,355
Total Miscellaneous Income $3 $77,355
Source: CBRE Hotels
B2
CBREIHotels
PROPOSED PICKERING HOTEL
JANUARY 1, 2025
Undistributed Expenses
Proposed Pickering Hotel
Administratve & General
Year 1 2025
Payroll Costs
Total/Per Room
Benefits
Total Payroll Costs
Other A&G Expenses
Credit Card Commissions (% of Gross Revenue)
Other A&G Costs
Total Other A&G Costs
Total Administrative & General
% of Gross Revenue
PAR
$2,167
25.0%
$2,708
2.5%
$800
$2,086
$4,794
9.3%
Total
$260,000
$65,000
$325,000
$154,293
$96,000
$250,293
$575,293
Information Technology Systems
Payroll Costs
Total/Per Room
Benefits
Total Payroll Costs
Other IT Expenses
System Expenses (% of Gross Revenue)
Other IT Costs
Total Other IT Costs
Total IT
% of Gross Revenue
$0
0.0%
$0
1.5%
$0
$771
$771
1.5%
$0
$0
$0
$92,576
$0
$92,576
$92,576
Sales & Marketing (Excl Franchise Fees)
Payroll Costs
Total/Per Room
Benefits
Total Payroll Costs
Other Marketing Expenses
General Marketing Costs
Total Sales & Marketing
% of Gross Revenue
Franchise Fees
Franchise Royalty Fee (% of Rooms Revenue)
Loyalty Program/Affiliation Fee (% Rooms Revenue)
Central Marketing Fee (% of Rooms Revenue)
$1,417
25.0%
$700
$2,471
4.8%
5.5%
0.0%
3.0%
$170,000
$42,500
$212,500
$84,000
$296,500
$280,731
$0
$153,126
Property Operations & Maintenance
Payroll Costs
Total/Per Room
Benefits
Total Payroll Costs
Total Other Maintenance Costs
Total Property Operations & Maintenance
% of Gross Revenue
$625
25.0%
$1,500
$2,281
4.4%
$75,000
$18,750
$93,750
$180,000
$273,750
Utilities
Total Utilities
% of Gross Revenue
Other Expenses
Rent (only if applicable)
Property Taxes
Insurance
Subtotal
Management Fee (% of Gross Revenue)
Incentive Management Fee - Optional (% Gross Revenue)
Reserve for Asset Replacement (% of Gross Revenue)
$2,000
3.9%
$0
$1,600
$400
$2,000
3.0%
0.0%
4.0%
$240,000
$0
$192,000
$48,000
$185,151
$0
$246,868
Source: CBRE Hotels
B3
CBRE
CBRE VALUATION & ADVISORY SERVICES
FRAN HOHOL, CMC
Senior Director
CBRE Hotels
Valuation & Advisory Services
(647) 943-3743
fran.hohol@cbre.com
www.cbre.com/vas