Toronto Rakes in 5-Star Hotels

New real estate hotel condo projects the first to be built in more than a decade in Toronto Ontario. Published in the North Shore News in April 2007. Author is Deborah Stokes a contributing writer.

Toronto: First it was the Trump Tower, then the Ritz-Carlton, Four Seasons and the Hazelton. Now Shangri-La is the latest luxury hotel to take up residence in Toronto. For a city that thinks of itself as world class, the arrival of these stars would seem to confirm it.

We’re talking five stars, to be exact. Though none of these establishments are open yet – all are in various stages of construction or planning – this wave of luxury ends a long drought for Toronto. It is one of the few cities of its size and stature without a five star hotel. Not even the long-standing Four Seasons Yorkville, the city’s most popular address for visiting celebrities and business titans, has that ranking.

These new hotels in Toronto are also the first to be built in Toronto in more than a decade. Though they certainly fill a gaping hole in the market, on paper, at least, the five-star-hotel scene suddenly looks a little crowded. Has Toronto hone from none to too many?

“There’s only so much you can absorb,” says Lyle Hall, Toronto-based managing director of HLT Advisory, an international tourism consulting firm. None of these brand new hotels is alarge project, so the issue is not overcapacity, he says, and questions whether they will be able to charge five star rates. In downtown Toronto, the average room rate is $167 per night. Five-star hotels in other major cities charge upwards of $400 a night. Says Hall, “There are only so many people who will pay that. During the film fest maybe, but what do you do the rest of the year?”

The Shangri-La, announced this month, will go up on University Avenue, Toronto’s grand boulevard, across from the new opera house and close to the financial district. Set to open in 2011, it will bring 200 luxury hotel rooms to Toronto, a first rate spa, shops, lounges and restaurants.

Ian Gillespie, president of Westbank, the developer for the Toronto Shangri-La project (as well as the Shangri-La in Vancouver, set to open in 2008), says the competition at the high end “was actually a selling feature for us.” In his view, the Ritz, Four Seasons and others will help develop the luxury hotel market in Toronto, and make the city known to the high end international leisure traveler.

A few blocks away from the Shangri-La site, the Trump International Hotel and Tower at the intersection of Bay and Adelaide streets has been in the works for a couple of years. When finished ti will add another 290 upscale hotel suites. Further south in the business district, the Ritz-Carlton, which aims to open in 2009, will have 260 luxury rooms and suites, plus all the usual Ritz amenities such as restaurants and lounges, a spa and even a ballroom.

In Yorkville, not far from the original Four Seasons, the new Four Seasons will add another 265 five-star rooms to the scene by 2009. Meanwhile, its neighbour the Hazelton, which will be the first of the fab-five hotels to open, early this summer, will have 77 luxury hotel rooms.

All of these hotel condo projects have a big insurance plan should the well-heeled traveller fail to materialize. Each one is being built with luxury condos as part of the real estate project. The hotel-residence model allows the real estate developer to leverage the cost of the building and operating a five-star hotel, with the sale of residential condo units. And there are economics to be achieved on facilities such as pools, spas, health clubs, even concierge and valet services, when both guests and residents use them.

Selling luxury condos in the range of $400 to $600 a square foot is “the only way to build a luxury hotel in Toronto,” says David Larone, a director with PKF Consulting in Toronto, which specializes in the hospitality and tourism industries.

And living at a posh hotel is an attractive selling point, he points out. In fact, the hotel itself may be just another amenity for residents of these projects. “These aren’t hotels,” Hall says. “These are apartment building with a hotel tossed in.”