Groupe Mach has invested about $80 million to purchase the 357-room InterContinental Montreal Hotel in Old Montreal, across from the city’s Palais des congrès convention centre.
The developer will spend an additional $20 to $25 million to refurbish the hotel in its entirety during the next 24 to 30 months – including gutting the guest rooms and revamping its lobbies, common areas, reception and two restaurants.
Mach won a bidding process, handled by Colliers, for the hotel at 360 Saint-Antoine St. W.
Vincent Chiara, president and founder of Groupe Mach, initially viewed the hotel “as a real estate play,” given its location and density.
“We really thought there was a really interesting property-land play on that asset” as a possible Plan B if the hotel didn’t work out.
InterContinental Montreal repositioning
However, once the developer did its due diligence and saw the hotel’s historical numbers prior to the pandemic, “we saw a lot of potential in operating the hotel” and a “very strong” management team.
“They made us an impressive presentation on how they were looking to reposition the property. We were impressed with what we saw and led us to say, ‘We can reposition this property as a hotel,’ ” he told RENX.
Not including the first quarter of 2022, the hotel’s occupancy rate last year was in the high-70s to 80 per cent range. “That’s considered quite good,” Chiara said. “Annualized, we’re hoping to be close to that.”
Chiara added “we’re anxious to learn more about the industry and hopefully this is the beginning of a new venture in doing more hotels.”
Opened in 1991, the 325,000-square-foot InterContinental Montreal Hotel consists of two buildings.
The newer 26-storey tower is primarily comprised of guest rooms and suites, while the older Nordheimer building, built in 1888, houses the hotel’s more than 25,000 square feet of conference and event spaces.
The hotel is attached to the World Trade Centre Montreal, a complex of historic buildings, and has direct underground access to the convention centre and the city’s underground network.
“That’s a real perk for this hotel,” Chiara said.
Formerly owned by Pandox
The InterContinental Montreal Hotel was sold by Pandox, a Swedish hotel property owner with 156 hotels in 15 countries, primarily in Northern Europe. Pandox acquired the InterContinental Montreal in 2007.
The sale was concluded last September but the closing took place at the beginning of this month.
In a statement last fall, Pandox CEO Liia Nõu said “the timing is right (and) the sale price is attractive.” The sale proves Pandox's value creation model works well in all its markets and “the divestment realizes value and frees up capital for continued expansion in our main markets."
In 2019, prior to the pandemic, the hotel had about $30 million in revenue and a net operating income of approximately $5 million, according to Pandox.
The hotel was last renovated in 2013 and Chiara notes “a renovation cycle in a hotel is anywhere between eight and 12 years.”
Mach plans to conduct the renovations on a per-floor basis, or several floors at a time while the hotel continues to operate.
No major changes are required for the structure and building envelope, which are in sound condition, and no major staffing changes are planned. The hotel has more than 220 employees.
Return to five-star property
Part of the more than 170-hotel InterContinental chain, the InterContinental Montreal became the first “four-diamond” hotel in Old Montreal when it opened.
Chiara hopes to get the hotel closer to the five-star range when renovations are completed. “That’s where the brand deserves to be and in other major cities that’s where InterContinental sits at.”
The hotel’s average room rate is about $200 a night, “quite low for a metropolitan city like Montreal,” Chiara says. He hopes room rates can be increased once the renovation is completed.
Groupe Mach also previously owned, but did not operate, the 61-room Hotel Le St. James in Old Montreal. The hotel closed its doors in 2022 and Mach recently sold it.
“We’re going to digest this one and once we’re finished digesting this one, we’ll analyze our appetite for more.”
Founded in 2000, Groupe Mach has a real estate portfolio of over 240 properties, comprising 40 million square feet.
In Montreal, its landmark buildings include the Sun Life Building, the 1000 De La Gauchetière, the CIBC Tower, Place Victoria and the KPMG Tower.
In the past year, Mach has significantly expanded its presence in the Ottawa and Quebec City markets and has expanded into Halifax.
EDITOR'S NOTE: This article was updated to correct the reference to the broker involved in the transaction – Colliers – due to incorrect information which had been provided to RENX.