The cost of developing its two “crown jewel” Hilton-branded hotels in Ottawa ballooned to double the original $25-million budget, but Morguard Corp. chairman and CEO K. Rai Sahi believes the transformation has been worth every penny.
“Today is the first time I’ve seen the fully finished product,” Sahi told RENX as he sat Monday in the large, airy restaurant area of his newly opened Hilton Garden Inn and Homewood Suites by Hilton in downtown Ottawa. “I am actually so impressed with it. This is not bias; I just did not expect this to come out so nice.
“You can not tell that it’s not built from the ground up.”
Part I of II Morguard stories: See also our Interview with CEO K. Rai Sahi
Sahi and Morguard (MRC-T) hosted a gala Monday night to officially cut the ribbon at the two new hotels which front Queen Street and back onto Sparks Street in the heart of the downtown, just a stone’s throw from Parliament Hill. The two towers are part of a three-tower complex bought several years ago by Morguard; the third tower contains an office building which houses Morguard’s Eastern offices.
Morguard’s dramatic revitalization
“This is the crown jewel of all the hotels that we own,” said Sanjay Rateja, vice-president of hotel operations for Morguard. He was holding court just a few metres from Sahi in the bright, open-concept bar/lounge area. “Ottawa will be the crown jewel of what we own, because what has turned out here is absolutely spectacular.
“We have very nice hotels, but this one is the flagship.”
The process has been long and not without difficulties. Sahi said the decision to retrofit the existing 10- and 17-storey towers, rather than demolishing them, was actually forced on Morguard because of the adjoining office tower.
“Do we demolish all three of them and just put up three towers?” he said, thinking back to the original decision. “That was not practical because we had long-term leases in the offices, so we might have had to wait a long time.
“We decided the easiest thing was let’s just spend $20 or $25 million to retrofit it,” he added. “We stripped it down to the bone.”
Little did he know at the time that, due to the condition of the 44-year-old building, delays and costs would continue to mount. The end product, however, is a dramatic revitalization, both inside and out.
Features of the two Hiltons
The 17-storey Homewood tower contains 171 sizable rooms for extended stays, while the 10-storey Hilton Garden comprises 175 rooms for shorter visits. The towers are served by a central service desk, lobby, restaurant and lounge. Amenities include a pool, a large fitness area and meeting and event areas.
The location offers easy access to downtown Ottawa, the Parliamentary District, Sparks Street and Byward Market tourist areas, its river pathways and a soon-to-be-opened LRT station.
Among the design features are enlarged guest rooms designed for business travellers; Morguard removed all the existing balconies during the renovations and used that extra space to enlarge the rooms.
Standard rooms contain microwaves and fridges. The extended stay rooms include a full kitchen, more individual space and some have tables, chairs and separate bedrooms.
“This is Canada’s first dual conversion as far as the Hilton is concerned,” Rateja explained. “They have never done this before because, simply, when they go to build a dual brand they are usually brand new constructions. They very seldom allow an existing building.
“But this building, the structure was so slam-dunk for what they were looking for. Part of the structure was originally apartment buildings and part was hotel. So the apartment building was suited very well for the Homewood Suites, which is the extended stay for the Hilton. You have a full kitchen in there, fridge, cooking, cups, crockery, utensils, everything is there.
“And the Hilton Garden side was the regular hotel (formerly a Delta). They saw a great opportunity and it came together as a partnership.”
Extended stay market well-suited to Ottawa
The extended say market, Rateja said, is currently underserved in the Ottawa market. With its proximity to the seat of Canada’s government, and a burgeoning downtown tech scene, he believes it is well-positioned for success.
“We from our experience feel very strongly Ottawa is a key market for extended stay because it’s the seat of the government; there are a lot of people coming internationally from overseas.”
One challenge which downtown hoteliers will face with the opening of the Hiltons, as well as a Le Germaine later this year in the Byward Market area just a few kilometres away, is additional competition. The Ottawa airport will also get new hotels later this year, adding a total of about 1,000 rooms to the market.
Rateja isn’t concerned.
“I think Ottawa needed a little injection of some new product in the market, because the hotels have been experiencing some wonderful business and occupancies, but they have not been putting in money to bring them up to date. We are positioned very well where we are.”
Unique synergies for Morguard in Ottawa
Morguard also benefits from a fortunate set of circumstances. When the redevelopment project began in 2016, there was no firm timeline for development at the western edge of Ottawa’s downtown.
In the years since, however, the massive mixed-use Zibi development began, and the city’s LRT line has neared completion bringing several more major residential and multi-use developments to the area.
Although another multi-billion dollar, mixed-use community planned for LeBreton Flats collapsed due to infighting among the winning bidders, that site still remains slated for major development.
“All that, once it transpires, we’ll be the closest hotel to downtown,” Rateja said. “So it has worked out fantastic.”
On the business development side, Morguard has a huge ace in its pocket. As Ottawa’s largest private commercial property owner — with in excess of five million square feet of commercial space, plus four golf courses and other properties — it has a long list of clients to leverage for its hotel business.
Rateja said the company has already been working this sector, having put its sales force into place a full year ago to start “knocking on doors.”
“It’s a huge synergy in place and we’ve already started working around it,” Rateja said. “We do own four golf clubs, so we are already working on synergies around that, creating a package.
“We have all those office buildings and all the tenants staying at these, they are the market that we are going to be going after. Those people need accommodation and living space. . . . The whole idea is to look within our backyard, all the people we do business with, and to have them come.”