Cash is pouring into Penticton’s accommodation sector with a flurry of sales activity and new construction. Favourable market conditions are driving the activity and it’s benefiting the local tourism and hospitality industry, according to industry brokers and city officials.
The accommodation sector saw record-high occupancy rates during the tourist season last year, according to data from Stats BC. Hotel room revenues climbed to almost $30 million last year, up from $22 million in 2012.
Lots of money is now changing hands, according to Tim Down, the managing broker at NAI Commercial Okanagan, a Kelowna-based commercial real estate brokerage.
“In the past twelve months we’ve seen a significant amount of activity with regards to listings but most importantly sales, four to five sales now, and we could potentially see some in the near future,” he said. Down said the Penticton commercial real estate accommodation market is hot.
“It’s more than we’ve seen in the last 10 years,” he said. “I think it’s a perfect storm right now with regards to interest rates being as low as they are, investment demand, and opportunities for local participants who understand the economics of the hotel industry.” The Spanish Villa motel on Lakeshore Drive is on the market for $5.9 million, the Beachside motel for $3.5 million and the Rochester motel for $2.9 million. Down said most buyers are from Western Canada but there is some international capital coming into the market. A part-owner of the Slumber Lodge, which just sold for $3.5 million, told Global News he’s backed by investors from China. New hotel construction is also changing the accommodation landscape in Penticton.
“It’s been kind of exciting because in the sixties we had a lot of activity and in the eighties with the Lakeside and really nothing since then,” said Penticton Mayor Andrew Jakubeit. “So this spring we welcomed a 70-unit new expansion of the Lakeside hotel and we’ve approved a 95-unit hotel by the bingo hall and a 74-unit one right across from the events centre where there is an abandoned gas station.” Travel Penticton, the city’s tourism arm, said the two new hotels near the South Okanagan Events Centre will bolster the city’s vision of an entertainment hub in that area. “We’ve had a bit of a shortage of accessible accommodation nearby so with two new properties coming in that’s going to be great when we have concerts, conventions, hockey, hockey school,” said executive director Thom Tischik. Shovels are expected to be in the ground by next year.