Oxford Properties buys Rimrock Resort Hotel in Banff

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Oxford Properties Group Inc. has purchased the Rimrock Resort Hotel in Banff, Alta., adding to its existing portfolio of large luxury hotels in the Canadian Rockies and reinforcing its bet on a rebound in demand for high-end accommodations.

The 330-room hotel, which opened in 1993 on Sulphur Mountain in Banff National Park, has a history going back to 1895. Oxford is planning a top-to-bottom renovation to refresh the property, which has 18,000 square feet of event space and a 9,000-square-foot spa.

Oxford has struck an agreement with French hospitality giant Accor S.A., ACRFF which manages the Fairmont and Sofitel brands as part of a portfolio of 5,400 properties, to manage and operate the Rimrock.

Neither the terms of the purchase nor the seller were disclosed in an announcement on Wednesday. But Oxford is paying $170-million to buy the hotel from an unnamed Japanese hospitality group and will put up to $100-million into renovations in the coming years, according to a source familiar with the transaction, whom The Globe and Mail is not identifying because they were not authorized to discuss the details of the deal.

Oxford is the real estate investment arm of Ontario Municipal Employees Retirement System (OMERS), the $124-billion pension plan manager. Other properties in Oxford’s portfolio, which had about 3,000 hotel rooms before the Rimrock deal, include the Fairmont Banff Springs, Fairmont Jasper Park Lodge and Fairmont Château Lake Louise – which are all in Alberta – as well as the Fairmont Château Whistler in B.C., giving it a dominant position in luxury accommodations in the area.

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Accor is a familiar partner, already managing the Fairmont properties Oxford owns, as well as recognizable Fairmont hotels in Quebec City, Toronto, Vancouver and Victoria.

Oxford has invested more than $500-million into a portfolio of mountain resort hotels since 2006, but the Rimrock is the first hotel the company has bought since 2014, signalling its returning confidence in the sector. Last year, Oxford sold more real estate properties than it acquired, making US$5.8-billion of dispositions including multiple office towers, but it has held onto marquee hotels it owns.

After a sharp drop in occupancy across the hotel sector as COVID-19 prompted travel restrictions and public-health concerns, Canadian hotels have bounced back, with first-quarter revenue per available room up 19 per cent from the same period in 2019, prior to the global pandemic, according to a report from Colliers.

That has made hotels one of the better performing parts of a broader real estate sector where property values are under increasing pressure, most notably in office buildings that are seeing falling occupancy rates and retail properties such as malls that are getting less foot traffic as workers’ and consumers’ habits are changing.

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Banff National Park gets more than four million visitors each year, and there is a limited stock of hotel properties because new development is capped to protect the park’s natural environment.

“We are very excited to acquire this extremely unique resort within the vibrant, high-barrier-to-entry Banff market,” Tyler MacDonald, Oxford’s head of hotels and alternatives, said in a prepared statement. “Our acquisition of The Rimrock speaks to our long-term conviction in Canada’s luxury resort hotel market, where we have meaningful scale.”

A multiyear renovation is expected to begin next year, and the Rimrock will stay open while the work is done.