This paper aims to analyse trends related to hotel investment in Canada and propose innovative practices for the financial management of hotels.
The foundation for this paper was laid during a well‐attended Worldwide Hospitality and Tourism Themes (WHATT) roundtable discussion between industry leaders and hospitality educators in May 2012. Topics of hotel investment and financial management in Canada are discussed in the context of the theme for the 2012 Canadian WHATT roundtable and the strategic question: “What innovations are needed in the Canadian hotel industry and how might they be implemented to secure the industry's future?”
The paper outlines historic hotel investment patterns dating back to the 1980s and analyses the current investment climate. Out of 850 hotels sold in Canada during the first decade of this millennium, foreign investor participation was less than 10 per cent. Currently the foreign interest in hotel investment in Canada is increasing and hotel assets in the 100‐175‐room range are more popular.
The paper presents three innovative practical tools for strong financial management of hotels to optimise ROIs – profit sensitivity analysis, strategic revenue management and embracing historical low interest rates.
Although Canada has done well weathering the global financial storm, Canadian hoteliers should exercise due diligence in financial management. As the team of authors represents both the industry and academia, this paper will be of immense value to students, researchers, and educators, as well as practitioners.
