Business & Oilsands(Archives)
McMurray Monopoly Man
It is both an exciting and challenging time to be operating a business in the Wood Buffalo region. The potential for growth is enormous and the opportunity for success looms large. This is perhaps no more true than in the hotel industry, where the Fort McMurray Hotel Group holds a solid percentage of the business.
“The hottest hotel market in Canada is in Alberta – Edmonton, Calgary – and Fort McMurray, of course,” says, Jean-Marc Guillamot, Area Director of the seven-hotel strong hotel group. “We have 832 rooms – or 41 per cent of the total number of rooms in the region. And we have the highest occupancy rate in Canada.”
In a region where occupancy during the early days of the week can be 100 per cent, the potential for investment return is huge, and with new growth on the horizon the possibilities for future investments continues to expand. The current properties in the hotel group portfolio include the Clearwater Suite Hotel, Radisson Hotel & Suites, Merit Hotel & Suites, Franklin Suite Hotel, Nomad Hotel & Suites, Vantage Inn & Suites, and the relatively new addition of the Clearwater Residence Hotel Timberlea – but it seems unlikely the group will stay at seven properties for long.
“The Clearwater Residence Hotel Timberlea was our first foray as far as hotels in Timberlea, but probably not the last,” says Guillamot of the former condominium development on the north side of Fort McMurray that has become the latest property in the hotel chain. “It has been a very successful acquisition for us, with a focus on long-term stay suites.”
Long-term stay units form a fundamental part of the hotel group’s business, although there are challenges there as well. While new construction projects in the region require workers who need housing while in the community there is competition for those housing dollars.
“Competition for infrastructure project housing is strong. There are condo units and basement suites. Big companies will go with hotels but there’s a huge amount of people who are living month-to-month in suites and condos,” says Guillamot.
And while the total market occupancy rate averages around 77 per cent there are times when the number slows – on the weekends, when contract and temporary workers tend to leave town for a few days.
“Lower occupancy rates on the weekends still hurt us,” say Guillamot. “This is why the sport tourism market is attractive to us because it covers those weekends. That’s one reason we are excited to partner with the facilities and organizations that bring events to the community.”
While the opportunity and potential for growth is vast, some of the challenges are more basic. “Staffing will always be a challenge, “ says Guillamot, “and more acute in Fort McMurray due to the cost of living. Our wages face tough competition from those paid by the industry. Fortunately, we have good relationships with agencies that bring in foreign workers. It will be a continuing challenge particularly with front line staff. We are spreading our employment net wider, looking in places like Ireland, Honduras, and Mexico.”
The region remains attractive to investors, despite some potential risks. “It’s very attractive for any investors because of the return on investment in Fort McMurray. They want us to do more and more but we have to be careful about what the market can stand, the cost of building, the cost of renovating – all that is a factor when making decisions on behalf of our investors. But it is an exciting time because Canada’s economy is even more resource focused, and we hope the decisions regarding pipelines go a positive way so our resources are open to the market and not landlocked. Everybody benefits,” says Guillamot. He continues: “I’m not saying we go crazy. We need to be stewards of our land, our resources, our green space – we need to be conscientious about our development of this huge resource and do it in a smart way. I think we have smart people in our oil sands industry who are focused on those goals.”
In a region fuelled by one primary industry and resource, though, risk is a very real consideration. “I think the unfortunate part of it is that here in Fort McMurray and most of Alberta we are tied to one resource. In the past in Fort McMurray, when the price of oil plummeted, we took a bath – a very acute and dramatic one. So that’s a danger; hence, our company is diversifying their market. We bought a hotel in Halifax, we bought one in Calgary. We diversify our market because as investors you want to have some kind of strategy where you don’t put all your eggs in one basket,” says Guillamot of the reality of being tied to a resource-driven region.
Guillamot is optimistic about the Fort McMurray Hotel Group’s future in the region, including their involvement in community. “It’s very important that we are stewards of these tremendous assets, and we certainly want to share our success with the community. We owe it to the community to make their city more liveable, like helping to attract events by facilitating organizations in securing heavily discounted room rates so they can afford to bring their events here. We also partner with local organizations - through places like Keyano College, the Northern Lights Regional Health Centre, the SPCA, and others – which make life in Fort McMurray more agreeable for residents,” says Guillamot.
As for the successful business side of that equation? Guillamot points to a new letter of understanding between the hotel group and the Fort McMurray Airport Authority. “We have an understanding to construct a new 170-room Marriott Courtyard at the new international airport,” he says. “We are always looking at opportunities. We never close ourselves to any possibilities,” he says with a smile. “Downtown, we will be looking at opportunities should they arise when the city centre redevelopment program is on target. It would make sense to put an addition onto the Nomad with the proposed arena, and maybe an opportunity to put something by the new civic centre based on the plan that we saw, but this is very preliminary at this time. Our intention is to continue to build our portfolio in Fort McMurray, while also investing in other parts of Canada.”
The commitment to business – and the community - is clearly reflected when he finishes by saying, “Our focus is to continue to operate a successful business – and serve as a community partner, too.”