TORONTO—When you start to see the light at the end of the tunnel and you’re sure it’s not an oncoming train, that’s when you should take advantage of opportunities in this industry, according to hotelier Michael L. Jackson.
The 25-year hotel veteran is poised to do just that as president and COO of the newly formed Dominion Grand Hotel Group. The Toronto-based hospitality division of Dominion Grand Development Group, a real estate investment firm, is on the prowl for acquisitions and management opportunities.
“We’re looking to acquire and operate hotels for our own account, both domestically and internationally, and also to provide third-party management services to other hoteliers,” Jackson said Monday during a phone interview.
Acquisition targets
Dominion Grand Hotel Group targeted Western Canada as its domestic base of operations with international aspirations in the special economic zones in mainland China, where the parent company has an office and strong existing relationships.
At home, the group is looking to acquire properties with the following characteristics:
- full-service with liquor licenses;
- tertiary markets;
- a value of CAD$5 million (US$5 million) or less;
- no particular brand families (bias is probably toward independent); and
- “Something that’s been owner-operated for a period of time and the owner wants to exit the business, and where there’s built-in opportunities for improvement in operation techniques and by some capital investment in the asset,” Jackson said.
The group is seeking to provide management services to properties that are:
- branded;
- limited- or focused-service;
- located in secondary and primary markets; and
- in the 120-room range.
Dominion Grand Hotel Group will cast its net for larger fish in China. The company will target midscale-type properties in the US$20 million to US$30 million price range with approximately 200 rooms—a segment that is flourishing along with the rising middle class, Jackson said.
The five-year growth plan:
- Western Canada: 20 hotels owned and operated; 10-15 hotels managed.
- Mainland China: three to eight hotels owned and operated; 10-15 hotels managed.
“It’s a particularly good time right now from the standpoint of having gone through a challenging economic circumstance,” Jackson said. “We’re slowly coming out the other end of that in this stage of the game. It’s going to be a relatively slow process, but I think the upward inclination of it is definitely there.”
Financing
To finance such expansion, the firm will turn to private equity and public debt financing.
“We’ve got some private equity sources,” Jackson said. “We’ve got a mortgage investment corporation that we operate here in Canada that will allow us access to certain types of equity and debt financing that we feel will be advantageous for us. But it’s largely private equity.”